sc13dza

DLH Management, L.L.C.

Its general partner

/s/ Lacy J. Harber

Lacy J. Harber, President

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F8wCahfGhRhQtsyl0c7t9zizuvkN6lK8Ka2sOdzYF6yQUWIz4fTwF0csnsJbS+TP FAN4JwSIsrcjc6CwRDPlZQ== 0000950134-06-007263.txt : 20060413 0000950134-06-007263.hdr.sgml : 20060413 20060413152938 ACCESSION NUMBER: 0000950134-06-007263 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20060413 DATE AS OF CHANGE: 20060413 GROUP MEMBERS: JOHN R CAWTHRON GROUP MEMBERS: TAS HOLDING INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TIMCO AVIATION SERVICES INC CENTRAL INDEX KEY: 0001012159 STANDARD INDUSTRIAL CLASSIFICATION: AIRPORTS, FLYING FIELDS & AIRPORT TERMINAL SERVICES [4581] IRS NUMBER: 650665658 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-47239 FILM NUMBER: 06758375 BUSINESS ADDRESS: STREET 1: 623 RADAR ROAD CITY: GREENSBORO STATE: NC ZIP: 27410 BUSINESS PHONE: (336) 668-4410 MAIL ADDRESS: STREET 1: 623 RADAR ROAD CITY: GREENSBORO STATE: NC ZIP: 27410 FORMER COMPANY: FORMER CONFORMED NAME: AVIATION SALES CO DATE OF NAME CHANGE: 19960415 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HARBER LACY J CENTRAL INDEX KEY: 0001044735 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: BUSINESS PHONE: 9034656937 MAIL ADDRESS: STREET 1: ROUTE 2 BOX 49Y CITY: DENNISON STATE: TX ZIP: 75020 SC 13D/A 1 d34971sc13dza.htm AMENDMENT TO SCHEDULE 13D sc13dza


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 11)*

TIMCO Aviation Services, Inc.

(Name of Issuer)

Common Stock, $0.001 par value

(Title of Class of Securities)

887151-20-7

(CUSIP Number)

Lacy J. Harber
LJH, Ltd.
377 Neva Lane
Denison, Texas 75020
(903) 465-6937

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

April 10, 2006

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

Page 1 of 15


CUSIP No.		887151-20-7

NAMES OF REPORTING PERSONS:

Lacy J. Harber

I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

xxx-xx-xxxx

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) x

(b) o

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

CITIZENSHIP OR PLACE OF ORGANIZATION:

United States

SOLE VOTING POWER:

NUMBER OF

0 shares

SHARED VOTING POWER:

BENEFICIALLY

OWNED BY

15,385,812 shares

EACH

SOLE DISPOSITIVE POWER:

REPORTING

PERSON

15,385,812 shares

WITH

SHARED DISPOSITIVE POWER:

0 shares

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

15,385,812 shares

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

71.8%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

Page 2 of 15


CUSIP No.		887151-20-7

NAMES OF REPORTING PERSONS:

John R. Cawthron

I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

xxx-xx-xxxx

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) x

(b) o

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

CITIZENSHIP OR PLACE OF ORGANIZATION:

United States

SOLE VOTING POWER:

NUMBER OF

0 shares

SHARED VOTING POWER:

BENEFICIALLY

OWNED BY

15,385,812 shares

EACH

SOLE DISPOSITIVE POWER:

REPORTING

PERSON

0 shares

WITH

SHARED DISPOSITIVE POWER:

0 shares

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

15,385,812 shares

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

71.8%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

Page 3 of 15


CUSIP No.		887151-20-7

NAMES OF REPORTING PERSONS:

TAS Holdings, Inc.

I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

xxx-xx-xxxx

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) x

(b) o

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

CITIZENSHIP OR PLACE OF ORGANIZATION:

Delaware

SOLE VOTING POWER:

NUMBER OF

0 shares

SHARED VOTING POWER:

BENEFICIALLY

OWNED BY

0 shares

EACH

SOLE DISPOSITIVE POWER:

REPORTING

PERSON

0 shares

WITH

SHARED DISPOSITIVE POWER:

0 shares

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

0 shares

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

0.0%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

Page 4 of 15

AMENDMENT TO SCHEDULE 13D

This Amendment to Schedule 13D (this “Schedule 13D/A”) constitutes Amendment No. 11 to the Schedule 13D, as amended, filed by Lacy J. Harber and John R. Cawthron (the “LJH Schedule 13D”), and amends and supplements the information previously set forth in the LJH Schedule 13D.

Item 1. Security and Issuer

This Schedule 13D/A relates to the common stock, $0.001 par value per share (the “Common Stock”) of TIMCO Aviation Services, Inc., a Delaware corporation (the “Issuer”), whose principal executive offices are located at 623 Radar Road, Greensboro, North Carolina 27410.

All share and per-share information provided in this Schedule 13D/A has been adjusted for the one-new-share-for-40-old-shares reverse stock split that was effected by the Issuer on November 22, 2005. All percentages of the class of Common Stock used herein are calculated based upon 21,441,510 shares of Common Stock outstanding as of November 22, 2005, as reported by the Issuer in its Form 8-K dated on November 22, 2005.

Item 2. Identity and Background

This Schedule 13D/A is filed by Lacy J. Harber, John R. Cawthron and TAS Holding, Inc., a Delaware corporation (“Newco” and, collectively, with Messrs. Harber and Cawthron, the “Reporting Persons”). The Reporting Persons have agreed to file this Schedule 13D/A jointly. Each of the Reporting Persons is responsible for the completeness and accuracy of the information concerning such person contained in this Schedule 13D/A.

Lacy J. Harber is the ultimate beneficial owner of all of the 15,385,812 shares of Common Stock that are reported in this Schedule 13D/A as owned of record by LJH, Ltd. (“LJH”). All of such shares of Common Stock are owned of record by LJH, a Texas limited partnership, the sole general partner of which is DLH Management, L.L.C. (“DLH”) and Mr. Harber is the sole managing member of DLH. Mr. Harber is the ultimate beneficial owner of LJH and therefore the ultimate beneficial owner of all of such shares of Common Stock. Mr. Harber has sole dispositive power over all of such shares of Common Stock. LJH has granted to Mr. Cawthron a revocable proxy to vote all shares of Common Stock that LJH would be entitled to vote at any annual or special meeting of the stockholders of the Issuer. Mr. Harber therefore shares voting power with respect to such shares with Mr. Cawthron.

The principal business of LJH is investments and its business address, and the business address of Mr. Harber and of LJH is 377 Neva Lane, Denison, Texas, 75020. Mr. Harber, a self-employed investor, is a citizen of the United States of America.

John R. Cawthron is the holder of a revocable proxy to vote all shares of Common Stock that LJH would be entitled to vote at any annual or special meeting of the stockholders of the Issuer. Mr. Cawthron therefore shares voting power with respect to such shares with Mr. Harber.

Page 5 of 15

Mr. Cawthron has no dispositive power with respect to such shares, and disclaims any pecuniary interest in such shares. Mr. Cawthron was elected as a member of the Issuer’s board of directors by action of the board effective February 6, 2006.

The principal business address of Mr. Cawthron is 329 West State Highway 6, Suite C, P.O. Box 8256, Waco, Texas 76714. Mr. Cawthron is a certified public accountant and the President of Cawthron, Wommack & Coker, P.C., a full service public accounting and consulting firm based in Waco, Texas. Mr. Cawthron also serves as managing partner and a director for several Texas-based business ventures ranging from service entities to commercial land development. Mr. Cawthron is a citizen of the United States of America.

Newco (TAS Holding, Inc.) is a Delaware corporation, formed on April 10, 2006, for the purpose of engaging in the proposed transactions described in Items 4 and 6. Mr. Cawthron is the sole officer and director of Newco. The business address of Newco is 377 Neva Lane, Denison, Texas, 75020.

During the last five years, none of Mr. Harber, Mr. Cawthron, Newco or LJH has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

The Reporting Persons believe that upon execution of the Transaction Agreement described below on April 10, 2006, they formed a group for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 13d-1 thereunder, with: Owl Creek I, L.P., a Delaware limited partnership (“Owl Creek I”); Owl Creek II, L.P., a Delaware limited partnership (“Owl Creek II”); Owl Creek Advisors, LLC, a Delaware limited liability company that is the general partner of Owl Creek I and Owl Creek II (the “OC General Partner”); Owl Creek Asset Management, L.P. a Delaware limited partnership (the “OC Investment Manager”), which is the investment manager for Owl Creek Overseas Fund, Ltd., an exempted company organized under the laws of the Cayman Islands (“Owl Creek Overseas”), and for Owl Creek Overseas Fund II, Ltd., an exempted company organized under the laws of the Cayman Islands (“Owl Creek Overseas II”); and Jeffrey A. Altman. Owl Creek I, Owl Creek II, Owl Creek Overseas and Owl Creek Overseas II are sometimes referred to collectively in this Schedule 13D/A as the “Owl Creek Investors.” The Owl Creek Investors, the OC General Partner, the OC Investment Manager and Jeffrey A. Altman are sometimes referred to collectively in this Schedule 13D/A as the Owl Creek Parties.

The Owl Creek Parties and the Reporting Persons have elected to satisfy their filing requirements with respect to Schedule 13D by making individual filings (one filing for the Reporting Persons and one filing for the Owl Creek Parties) rather than by making a single joint filing. For information regarding the Owl Creek Parties, including information with respect to the Items called for by Schedule 13D, please see the Owl Creek 13D, which is available on the SEC’s website at www.sec.gov.

Page 6 of 15

Item 3. Source and Amount of Funds and Other Consideration

All shares of Common Stock purchased by LJH have been purchased using personal investment funds on hand or provided by Mr. Harber, including funds borrowed from a financial institution using a personal line of credit that is not secured by the Common Stock owned or to be acquired by LJH. All funds to be provided by LJH for the additional working capital advances to the Issuer or to deposit funds in escrow as described in Items 4 and 6 below will come from the same sources.

Funds required by Newco for the transactions described in Items 4 and 6 will be provided by capital contributions from LJH and from the Owl Creek Parties pursuant to the Transaction Agreement.

Item 4. Purpose of Transaction

The Issuer has advised the Reporting Persons that it is in breach of certain of the financial covenants (the “Defaults”) in the Financing Agreement dated April 5, 2004 between the Issuer, certain of its subsidiaries named therein and CIT Group/Business Credit, Inc., as Agent and one of the “Credit Parties” named therein (“CIT”), as amended (the “CIT Facility”), and in the Restated and Amended Financing Agreement dated April 8, 2005 between the Company, certain of its subsidiaries named therein and Monroe Capital Advisors, LLC as the “Lender” named therein (“Monroe”), as amended (the “Monroe/Fortress Facility”), which on April 11, 2005 was assigned to Fortress Credit Opportunities I LP (“Fortress”).

Pursuant to a Transaction Agreement described in Item 6, LJH and the Owl Creek Investors (collectively, the “Investors”) have agreed to attempt to resolve the Defaults under the Monroe/Fortress Facility by LJH purchasing that facility from Fortress. This action was completed on April 10, 2006, with the Owl Creek Investors simultaneously acquiring an approximately 20% participation in the Monroe/Fortress Facility. LJH has proposed to the Issuer that it would modify the terms of that facility to, among other things, resolve the Defaults thereunder, decrease the interest rate and fees payable by the Issuer with respect to the Monroe/Fortress Facility and make available to the Issuer $6 million of additional funding (the “Working Capital Infusion”). LJH has advised the Issuer that as conditions to modifying the terms of the Monroe/Fortress Facility to resolve the Defaults thereunder and providing the Working Capital Infusion, (i) the Issuer must agree to merge with Newco in a transaction that will pay holders of the Issuer’s outstanding Common Stock other than the Investors cash consideration for their shares (the “Merger”), (ii) the Issuer must obtain amendments to the CIT Facility which will resolve the Defaults thereunder and make available to the Issuer additional credit to fund its business, all in a manner satisfactory to the Investors, and (iii) the Issuer must agree to sell Newco 2,400,000 shares of Common Stock at a price of $2.50 per share. The Merger and issuance of 2,400,000 shares of Common Stock would be made expressly subject to the conditions that all required filings with the SEC by the Issuer, Newco, LJH and the Owl Creek Parties must have been made, and all related deliveries of documents to the stockholders of the Issuer and passage of notice periods must have occurred, as required under Section 13(e) of the Securities Exchange Act of 1934 and the rules and regulations thereunder.

Page 7 of 15

A special committee of the Issuer’s board of directors is considering these matters. Discussions and negotiations among the parties are ongoing. However, based on negotiations to date, if the proposed merger is completed, it is currently expected that the Issuer’s stockholders (other than the Investors) will receive $4.00 per share, without interest. Due to the uncertainties inherent in negotiations of this nature, there can be no assurance that binding definitive agreements with respect to these matters will be concluded or that the Defaults will be successfully resolved through this process or that the Merger will occur. LJH reserves the right to withdraw its proposals described above at any time prior to the execution of binding definitive agreements with the Issuer.

If the Issuer agrees to enter into an agreement with Newco providing for the Merger and the Merger is consummated, Newco will own 100% of the Common Stock of the Issuer, the Issuer will become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act, the composition of the board of directors of the Issuer would be changed to include individuals designated by the Investors and the Common Stock would no longer be traded or quoted. The Merger might also result in the occurrence of one or more of the other matters in the list enumerated below.

Except as described above or in Item 6, the Reporting Persons have no current plans or proposals which relate to or would result in:

(a) the acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer;

(b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries;

(d) any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number of term of directors or to fill any existing vacancies on the board of directors of the Issuer;

(e) any material change in the present capitalization or dividend policy of the Issuer;

(f) any other material change in the Issuer’s business or corporate structure;

(g) changes in the Issuer’s charter, by-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuers by any person;

(h) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an interdealer quotation system of a registered national securities association;

(i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or

(j) any action similar to any of those enumerated above.

Page 8 of 15

LJH intends to continuously review its investment in the Issuer, and, subject to the provisions of the Transaction Agreement, may, at any time and from time to time, review or reconsider its position and formulate plans or proposals that relate to, might result in, or have the purpose or effect of resulting in the matters enumerated above. Subject to the Transaction Agreement and compliance with applicable law, LJH may make further purchases of Common Stock from time to time and may dispose of any or all of the Common Stock of the Issuer that it holds. To the extent the Monroe/Fortress Facility remains in default or becomes in default in the future, the Investors may exercise their rights as the lenders thereunder. The Reporting Persons may engage in additional discussions with the Issuer’s other lenders regarding the terms of the Issuer’s indebtedness and regarding other matters relating to the Issuer. Subject to the Transaction Agreement, the Reporting Persons may also in the future (although they have no obligation to do so) propose other arrangements or enter into agreements with the Issuer’s other lenders seeking to resolve loan covenant defaults or seeking modifications of terms of the Issuer’s indebtedness to avoid restrictions that limit the availability of funding to the Issuer. If any such agreements are reached in the future, LJH may seek compensation from the Issuer for any actions by LJH with respect to the Issuer’s lenders which benefit the Issuer, which compensation may include the payment of cash or the issuance of additional equity or debt securities of the Issuer.

Item 5. Interest in Securities of the Issuer

As of the date of this Schedule 13D/A, Mr. Harber beneficially owns 15,385,812 shares of the issued and outstanding Common Stock, constituting 71.76% of the issued and outstanding Common Stock (calculated in accordance with Rule 13d-3(d)). LJH has granted a revocable proxy to vote such shares to Mr. Cawthron. As a result of such proxy, Mr. Cawthron shares the power to vote the Shares. Mr. Harber continues to have sole dispositive power with respect to all of these shares. Other than the shares with respect to which he holds a revocable proxy, as described above, Mr. Cawthron does not beneficially own any other shares of Common Stock.

In addition to such shares, as of the date of this Schedule 13D/A, Mr. Harber also beneficially owns the following derivative securities of the Issuer: (i) LJH holds a warrant which will allow it to purchase an additional 47,125 shares of authorized but unissued Common Stock (for an aggregate exercise price of $1,885) upon the final maturity of the Issuer’s remaining outstanding 8% senior subordinated convertible PIK notes due 2006 and 8% junior subordinated convertible PIK notes due 2007 (the “LJH Warrant”); and (ii) the following warrants to purchase shares of Common Stock:


	Per Share
Shares	Exercise Price		Expiration Date
125	$	700.00	April 19, 2006
833	$	560.00	May 22, 2006
28,475	$	206.40	February 28, 2007
18,750	$	42.00	September 9, 2007

Page 9 of 15

As of the date of this Schedule 13D/A, Newco does not own beneficially own any shares of Common Stock. Subject to certain conditions set forth in the Transaction Agreement, LJH and the Owl Creek Investors have agreed to contribute to Newco their shares of Common Stock, as described in Item 6. Mr. Cawthron disclaims any beneficial or pecuniary interest in Newco.

Other than as described in Item 4 or Item 6 of this Schedule 13D/A, none of the Reporting Persons has effected any transactions in the Common Stock during the past 60 days.

Based on the Owl Creek 13D, as filed on December 1, 2005, the Reporting Persons believe that the Owl Creek Parties, or some of them, are the beneficial owners of an aggregate of 3,722,399 shares of Common Stock, representing 17.36% of the outstanding Common Stock. Combined with the 15,385,812 shares of Common Stock owned of record by LJH, LJH and the Owl Creek Investors together own 19,208,211 shares of Common Stock, representing 89.12% of the outstanding Common Stock. LJH and Mr. Harber disclaim any beneficial interest in the Common Stock owned by the Owl Creek Investors and disclaim any beneficial interest in Newco other than to the extent of their pecuniary interest.


Item 6.		Contracts, Arrangements, Understandings or Relationships with respect to Securities of the Issuer.

In connection with the matters described herein, LJH, Newco and the Owl Creek Investors have entered into a Transaction Agreement dated as of April 10, 2006. A copy of the Transaction Agreement is filed as Exhibit 99.2 to this Schedule 13D/A and is incorporated by reference herein. The summary of the Transaction Agreement set forth herein is qualified in its entirety by reference to the full text of the Transaction Agreement.

In accordance with the Transaction Agreement, LJH entered into an Assignment and Acceptance (the “Assignment and Acceptance”) dated as of April 10, 2006, among Monroe, Fortress Credit Opportunities I LP (“Fortress”) and Monroe Investments, Inc., as assignors (collectively, the “Assignors”), and LJH, as assignee, providing for the purchase of the Monroe/Fortress Facility by LJH on the terms and conditions stated therein, which terms include a cash payment to Fortress in respect of the principal, accrued interest, fees and expenses of Fortress of an amount of approximately $18.4 million (the “Monroe/Fortress Facility Purchase Price”). The OC Investment Manager executed and delivered to LJH a Participation Agreement dated as of April 10, 2006 (the “Participation Agreement”) providing for the participation in the Monroe/Fortress Facility by the OC Investment Manager, on behalf of the Owl Creek Parties, on the terms and conditions stated therein and its agreement to fund 19.48% of the Monroe/Fortress Facility Purchase Price. These transactions were funded and closed on April 10, 2006. The Assignment and Acceptance is attached to this Schedule 13D/A as Exhibit 99.3 and the Participation Agreement is attached to this Schedule 13D/A as Exhibit 99.4. As a condition to LJH’s performance of the Assignment and Acceptance, the Issuer and certain of its subsidiaries executed and delivered to LJH a Ratification Agreement, which is attached to this Schedule 13D/A as Exhibit 99.5 (the “Ratification Agreement”), confirming the validity of the Monroe/Fortress Facility and waiving and releasing claims against the assignors and against LJH with respect thereto, among other things. The summaries of the Assignment Agreement, the Participation Agreement and the

Page 10 of 15

Ratification Agreement set forth herein are qualified in their entirety by reference to the full text of such agreements.

The Transaction Agreement provides for a series of other transactions which LJH has proposed to undertake with the Issuer, which are described below. The Issuer’s Board of Directors has formed a Special Committee to consider these matters and act on behalf of the Issuer in its negotiations with the Investors, and discussions and negotiations among the parties are ongoing. Due to the uncertainties inherent in negotiations of this nature, there can be no assurance that binding definitive agreements with respect to these matters will be concluded or that the Defaults will be successfully resolved through this process. LJH reserves the right to withdraw its proposals described below at any time prior to the execution of binding definitive agreements with the Issuer.

In accordance with the Transaction Agreement, LJH has proposed to the Issuer that it would enter into an amendment of the Monroe/Fortress Facility with the Issuer and the other borrowers and guarantors named in the Monroe/Fortress Facility, providing for certain amendments and waivers with respect to the Monroe/Fortress Facility to cure the Defaults, decrease the interest rate and fees payable by the Issuer with respect to the Monroe/Fortress Facility and provide for an advance to the Issuer of the $6,000,000 Working Capital Infusion. The OC Investment Manager, on behalf of the Owl Creek Parties, has, pursuant to the Participation Agreement and Transaction Agreement, agreed to fund $1,168,800 (19.48%) of the Working Capital Infusion. The Issuer is discussing this proposal with LJH.

Pursuant to the Transaction Agreement, LJH and the Owl Creek Investors agree to fund Newco with $10,006,524 from which to pay consideration in the proposed Merger to stockholders of the Issuer, representing the product of $4 multiplied by the number of issued and outstanding shares of Common Stock that are not owned by LJH or the Owl Creek Investors plus the number of shares of Common Stock that are issuable upon the exercise of existing conversion rights by the holders of certain subordinated convertible PIK notes and holders of warrants, options and stock grant rights identified in the Transaction Agreement, including the LJH Warrant referenced in Item 5. Of this amount, LJH agreed to contribute the sum of $8,057,252 (80.52%) and the Owl Creek Investors agreed to contribute the sum of $1,949,272.00 (19.48%). LJH and the Owl Creek Investors also agreed that Newco may deposit the sum of $10,006,524 in an escrow account pursuant to an escrow agreement, to be disbursed as provided in that escrow agreement and the agreement providing for the Merger.

The Transaction Agreement provides that on or before the date that is two business days prior to the closing of the proposed Merger between the Issuer and Newco, and subject to the satisfaction of the conditions to closing set forth in the Transaction Agreement and such merger agreement, LJH and the Owl Creek Investors will contribute all shares of Common Stock owned by them to Newco. Pursuant to this provision LJH would contribute 15,385,812 shares of Common Stock to Newco and the Owl Creek Investors would contribute an aggregate of 3,722,399 shares of Common Stock to Newco.

The Transaction Agreement contemplates that the Issuer will agree to issue to Newco 2,400,000 shares of the Issuer’s common stock at a price of $2.50 per share, which could be paid for with cash, indebtedness, or a combination. The Participation Agreement and the Transaction

Page 11 of 15

Agreement contemplate that the $6 million principal balance of the Working Capital Infusion would be applied as the consideration for the issuance of these shares, of which 1,932,480 (80.52%) shares of Common Stock would be deemed contributed to Newco by LJH and 467,520 (19.48%) shares of Common Stock would be deemed contributed to Newco by the Owl Creek Investors. The Issuer is currently discussing this proposal with the Investors.

The ownership of the Newco common stock to be issued to LJH and the Owl Creek Investors is subject to a Stockholders Agreement dated as of April 10, 2006 that was executed and delivered in connection with the Transaction Agreement and which is attached to this Schedule 13D/A as Exhibit 99.6 (the “Stockholders Agreement”). The Stockholders Agreement restricts the transfer of shares of Newco common stock and provides for certain other rights and obligations set forth therein. The summary of the Stockholders Agreement set forth herein is qualified by reference to the full text of the Stockholders Agreement. LJH, the Owl Creek Investors and Newco also entered into a Registration Rights Agreement dated as of April 10, 2006 that was executed and delivered in connection with the Transaction Agreement and which is attached to this Schedule 13D/A as Exhibit 99.7 (the “Registration Rights Agreement”). The Registration Rights Agreement enumerates the parties’ rights regarding registration of their Newco common stock and provides for certain other rights and obligations set forth therein. The summary of the Registration Rights Agreement set forth herein is qualified by reference to the full text of the Registration Rights Agreement.

In the Transaction Agreement, LJH, the Owl Creek Investors and Newco agreed to vote all shares of Common Stock owned by them to approve the Merger and any other matters submitted to a vote of the stockholders of the Issuer in connection with any meeting of the Issuer’s stockholders called to consider and vote upon the Merger. The Transaction Agreement also provides that if prior to the proposed Merger LJH determines to sell its shares of Common Stock to any person, the Owl Creek Investors may elect to be included in that transaction and that if either of LJH or the Owl Creek Investors receives an offer to purchase their Common Stock, they will first offer it to the other for purchase before they may sell it. In addition, each party must consult with the other prior to seeking a buyer of its shares of Common Stock.

LJH has engaged Mr. Cawthron to advise and represent LJH with respect to its investment in the Issuer and in any discussions undertaken with respect to matters such as those described above at Item 4. LJH has not authorized Mr. Cawthron to enter into binding agreements on its behalf. LJH may compensate Mr. Cawthron from time to time for his actions on behalf of LJH relating to its ownership of the Issuer’s securities upon such terms and conditions as they may agree.

LJH has requested that the Company designate Mr. Cawthron as the Chief Executive Officer of the Company as a condition to, and effective upon, the proposed amendment of the Monroe/Fortress Facility to, among other things, resolve the Defaults thereunder, decrease the interest rate and fees payable by the Issuer with respect to the Monroe/Fortress Facility and make available to the Issuer the $6 million Working Capital Infusion.

Page 12 of 15

Except as described in the Schedule 13D/A, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 hereof and between such persons and any person with respect to any securities of the Issuer, including but not limited to transfer or voting of any other securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholding of proxies.

Item 7. Materials to be Filed as Exhibits


Exhibit No.		Description of Exhibit
99.1		Agreement regarding joint filing of Schedule 13D

99.2		Transaction Agreement dated as of April 10, 2006, among LJH, Ltd., Owl Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas Fund, Ltd. and Owl Creek Overseas Fund II, Ltd.

99.3		Assignment and Acceptance dated as of April 10, 2006, among Monroe Capital Advisors, LLC, Fortress Credit Opportunities I LP and Monroe Investments, Inc., as assignors, and LJH, Ltd., as assignee

99.4		Participation Agreement dated as of April 10, 2006, among LJH, Ltd., and Owl Creek Asset Management, L.P.

99.5		Ratification Agreement dated as of April 10, 2006 among LJH, Ltd., TIMCO Aviation Services, Inc. and certain of its subsidiaries

99.6		Stockholders Agreement relating to the shares of TAS Holding, Inc., dated as of April 10, 2006, among LJH, Ltd., Owl Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas Fund, Ltd., Owl Creek Overseas Fund II, Ltd. and TAS Holding, Inc.

99.7		Registration Rights Agreement relating to the shares of TAS Holding, Inc., dated as of April 10, 2006, among LJH, Ltd., Owl Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas Fund, Ltd., Owl Creek Overseas Fund II, Ltd. and TAS Holding, Inc.

Page 13 of 15

SIGNATURES

After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct.

Dated: April 13, 2006

LJH, Ltd.


/s/ Lacy J. Harber

Lacy J. Harber

/s/ John R. Cawthron

John R. Cawthron

TAS Holding, Inc.

By:		/s/ John R. Cawthron

		John R. Cawthron
		President

Page 14 of 15

INDEX TO EXHIBITS


Exhibit No.		Description of Exhibit
99.1		Agreement regarding joint filing of Schedule 13D

99.2		Transaction Agreement dated as of April 10, 2006, among LJH, Ltd., Owl Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas Fund, Ltd. and Owl Creek Overseas Fund II, Ltd.

99.3		Assignment and Acceptance dated as of April 10, 2006, among Monroe Capital Advisors, LLC, Fortress Credit Opportunities I LP and Monroe Investments, Inc., as assignors, and LJH, Ltd. as assignee

99.4		Participation Agreement dated as of April 10, 2006, among LJH, Ltd. and Owl Creek Asset Management, L.P.

99.5		Ratification Agreement dated as of April 10, 2006 among LJH, Ltd. TIMCO Aviation Services, Inc. and certain of its subsidiaries

99.6		Stockholders Agreement relating to the shares of TAS Holding, Inc., dated as of April 10, 2006, among LJH, Ltd., Owl Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas Fund, Ltd., Owl Creek Overseas Fund II, Ltd. and TAS Holding, Inc.

99.7		Registration Rights Agreement relating to the shares of TAS Holding, Inc., dated as of April 10, 2006, among LJH, Ltd., Owl Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas Fund, Ltd., Owl Creek Overseas Fund II, Ltd. and TAS Holding, Inc.

Page 15 of 15

EX-99.1 2 d34971exv99w1.htm AGREEMENT REGARDING JOINT FILING exv99w1

Exhibit 99.1

AGREEMENT

The undersigned agree that this Schedule 13D/A relating to the common stock of TIMCO Aviation Services, Inc. shall be filed on behalf of the undersigned.


LJH, Ltd.		/s/ Lacy Harber
By:	DLH Management, L.L.C.	Lacy Harber
	Its general partner	April 12, 2006

/s/ Lacy Harber		/s/ John R. Cawthron

	Lacy Harber, President	John R. Cawthron*
	April 12, 2006	April 12, 2006

TAS Holding, Inc.

/s/ John R. Cawthron

By:	John R. Cawthron
	President

* Mr. Cawthron disclaims any pecuniary interest in the Shares reported herein.

EX-99.2 3 d34971exv99w2.htm TRANSACTION AGREEMENT exv99w2

Exhibit 99.2

Execution Copy

TRANSACTION AGREEMENT

By and Among

LJH, LTD.,

OWL CREEK I, L.P., OWL CREEK II, L.P.,

OWL CREEK OVERSEAS FUND I, LTD.,

OWL CREEK OVERSEAS FUND II, LTD.

AND TAS HOLDING, INC.

As of April 10, 2006

TRANSACTION AGREEMENT

TRANSACTION AGREEMENT, dated as of April 10, 2006 (the “Agreement”), is by and among LJH, Ltd., a Texas limited partnership (“LJH”), Owl Creek I, L.P., Owl Creek II L.P., Owl Creek Overseas Fund, Ltd. and Owl Creek Overseas Fund II, Ltd., each a Delaware limited partnership (together, the “Owl Creek Investors,” and together with LJH, the “Investors”) with respect to certain transactions proposed to be undertaken by LJH and the Owl Creek Investors with respect to their ownership of TIMCO Aviation Services, Inc. (the “Company”), and TAS Holding, Inc., a Delaware corporation (“Newco”).

WHEREAS, the Company has experienced continuing losses in its business during the fourth quarter of 2005 and in 2006 that are greater than had been planned for and which have restricted the Company’s liquidity and resulted in breaches of certain of the financial covenants (the “Defaults”) in the Financing Agreement dated April 5, 2004 between the Company, certain of its Subsidiaries named therein and CIT Group/Business Credit, Inc., as Agent and one of the “Credit Parties” named therein (“CIT”), as amended (the “CIT Facility”), and in the Restated and Amended Financing Agreement dated April 8, 2005 between the Company, certain of its Subsidiaries named therein and Monroe Capital Advisors, LLC as the “Lender” named therein (“Monroe”), as amended (the “Monroe/Fortress Facility”), which on April 11, 2005 was assigned to and is now held by Fortress Credit Opportunities I LP (“Fortress”).

WHEREAS, the Investors have proposed to purchase the Monroe Facility and to modify its terms to, among other things, resolve the Defaults thereunder and make available to the Company $6 million of additional funding (the “Working Capital Infusion”), and by working with the Company to obtain amendments to the CIT Facility which will resolve the Defaults thereunder and make available to the Company additional credit to fund its business.

WHEREAS, as a result of the Company’s financial difficulties in recent years and cumulative 1 for 50 reverse stock splits, the Company has a large number of shareholders who own fewer than 100 shares, and the aggregate ownership of the Company’s Common Stock by holders other than the Investors is approximately eleven percent;

WHEREAS, the continuing financial distress of the airline industry may require additional loans or capital infusions by the Investors, which are complicated by applicable state and federal laws and regulations relating to transactions between the Investors and the Company so long as the Company continues to file reports with the SEC;

WHEREAS, for the foregoing reasons, the Investors have determined to require, as a condition to taking action to resolve the Defaults and provide the Working Capital Infusion, that the Company agree to (a) merge with Newco, a newly formed Delaware corporation owned by the Investors, in a transaction whereby (i) holders of the Company’s Common Stock other than the Investors will be entitled to receive a cash amount of $4.00 per share and (ii) the Company shall continue as the surviving corporation and an Affiliate (as defined below) of the Investors and (b) issue to TAS up to 2,400,000 shares of Company Common Stock at a price of $2.50 per share;

WHEREAS, the Investors desire to enter into this Agreement to provide for the various understandings and agreements between them with respect to the transactions described in this preamble and in this Agreement.

NOW, THEREFORE, the Investors and TAS agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions. Certain capitalized terms are used in this Agreement as specifically defined in this Section 1.1 as follows:

“Affiliate” means any Person directly or indirectly controlling, controlled by or under direct or indirect common control with the Company (or other specified Person) and shall include (a) any Person who is an officer, director, manager or beneficial holder of at least 10% of the outstanding equity securities of the Company (or other specified Person), (b) any Person of which the Company (or other specified Person) or any officer, director or manager of the Company (or other specified Person) shall, directly or indirectly, either beneficially own at least 10% of the outstanding equity securities or constitute at least a 10% participant, and (c) in the case of a specified Person who is an individual, Members of the Immediate Family of such Person; provided, however, that the Investors shall not be Affiliates of the Company for purposes of this Agreement.

“Agreement” is defined in the Preamble.

“By-laws” means all written rules, regulations, procedures and by-laws and all other similar documents, relating to the management, governance or internal regulation of a Person other than an individual, each as from time to time amended or modified.

“Charter” means the articles or certificate of incorporation, certificate of formation, limited liability company agreement, statute, constitution, joint venture or partnership agreement or articles or other charter of any Person other than an individual, each as from time to time amended or modified.

“CIT” is defined in the preamble.

“CIT Facility” is defined in the preamble.

“Closing Date” is defined in Section 2.6.

“Commission” means the Securities and Exchange Commission.

“Company” is defined in the Preamble.

“Company Common Stock” means the common stock, $.001 par value per share, of the Company.

“Company Shares” is defined in Section 5.2(a).

“Contractual Obligation” means, with respect to any Person, any contracts, agreements, deeds, mortgages, leases, licenses, other instruments, commitments, undertakings, arrangements or understandings, written or oral, or other documents, including any document or instrument evidencing indebtedness, to which any such Person is a party or otherwise subject to or bound by or to which any asset of any such Person is subject.

“Escrow Agreement” is defined in Section 2.3(c).

“Exchange Act” means the Securities Exchange Act of 1934, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as from time to time amended and in effect.

“Exercise Notice” is defined in Section 5.3(c)(ii).

“Exercising Investor” is defined in Section 5.3(c)(ii).

“Fortress” is defined in the preamble.

“Independent Appraiser” means a third party appraiser which (i) does not have a current material business or other relationship with the Company, any shareholders of the Company or any of their respective Affiliates and (ii) is a nationally recognized investment banking or accounting firm or an Affiliate of such a firm.

“Information Notice” is defined in Section 5.3(a).

“Information Period” is defined in Section 5.3(a).

“Investors” is defined in the preamble.

“Legal Requirement” means any federal, state or local law, statute, standard, ordinance, code, order, rule, regulation, resolution, promulgation or any final order, judgment or decree of any court, arbitrator, tribunal or governmental authority, or any license, franchise, permit or similar right granted under any of the foregoing.

“LJH” is defined in the preamble.

“Merger” means the merger of the Company with and into Newco pursuant to the Merger Agreement.

“Merger Agreement” is defined in Section 2.3(b).

“Monroe” is defined in the preamble.

“Monroe/Fortress Facility” is defined in the preamble.

“Monroe/Fortress Facility Amendment” is defined in Section 2.1.

“Monroe/Fortress Facility Assignment” is defined in Section 2.1.

“Monroe/Fortress Facility Purchase Price” is defined in Section 2.1.

“Newco” is defined in the preamble.

“Newco Common Stock” means the common stock, $.001 par value per share, of Newco.

“Notice Date” is defined in Section 5.3(c)(i)(5).

“Option Closing Date” is defined in Section 5.3(c)(iii).

“Option Notice” is defined in Section 5.3(c)(i).

“Other Investors” is defined in Section 5.3(a).

“Owl Creek Investors” is defined in the preamble.

“Participation Agreement” is defined in Section 2.1.

“Permitted Transferee” is defined in Section 5.2(b).

“Person” means an individual, partnership, corporation, company, association, trust, joint venture, unincorporated organization and any governmental department or agency or political subdivision.

“Proposed Transferee” is defined in Section 5.3(c)(i).

“Registration Rights Agreement” is defined in Section 2.3(f).

“Related Agreements” means the Stockholders Agreement, the Registration Rights Agreement, the Merger Agreement, the Escrow Agreement, the Amendment to Financing Agreement and the Participation Agreement.

“Schedule 13e-3 Filing” is defined in Section 2.5.

“Securities Act” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be from time to time amended and in effect.

“Selling Investor” is defined in Section 5.3(c)(i).

“Specified Shares” is defined in Section 2.3(f).

“Stockholders Agreement” is defined in Section 5.3(c)(i).

“Subsidiary” means any Person of which the Company now or hereafter shall at the time (a) own directly or indirectly through a Subsidiary at least 50% of the outstanding capital stock (or other shares of beneficial interest) entitled to vote generally or (b) constitute a general partner.

“Tag Along Rights” is defined in Section 5.4(a).

“Tag Along Investors” is defined in Section 5.4(b).

“Transferring Investor” is defined in Section 5.3(a).

ARTICLE II

TRANSACTIONS

2.1 Purchase of Monroe/Fortress Facility; Participation by Owl Creek Investors. On or before April 14, 2006, LJH will enter into an Assignment and Acceptance with Fortress providing for the purchase of the Monroe/Fortress Facility by LJH on the terms and conditions stated therein (the “Monroe/Fortress Facility Assignment”) in the form attached to this Agreement as Exhibit A, which terms include a cash payment to Fortress in respect of the principal, accrued interest, fees and expenses of Fortress of an amount not to exceed $18,750,000.00 (the “Monroe/Fortress Facility Purchase Price”). Contemporaneously therewith, the Owl Creek Investors shall execute and deliver to LJH a Participation Agreement in the form of Exhibit B to this Agreement (the “Participation Agreement”) providing for the participation in the Monroe/Fortress Facility by the Owl Creek Investors on the terms and conditions stated therein and their agreement to fund 19.48% of the Monroe/Fortress Facility Purchase Price at the time such payment is due, as specified in the Monroe/Fortress Facility Assignment. Such payment by the Owl Creek Investors shall be subject to the terms and conditions set forth in the Participation Agreement and will be made by wire of immediately available funds to the account designated by LJH to the Owl Creek Investors in a written notice provided to the Owl Creek Investors not less than twenty-four (24) hours prior to the closing contemplated by the Monroe/Fortress Facility Assignment.

2.2 Amendment of Monroe/Fortress Facility; Working Capital Infusion. On or before April 14, 2006, LJH will enter into an Amendment to Financing Agreement with the Company and the other borrowers and guarantors named in the Monroe/Fortress Financing Agreement in substantially the form that has been delivered by LJH to the Owl Creek Investors (the “Monroe/Fortress Facility Amendment”), providing for certain amendments and waivers with respect to the Monroe/Fortress Facility to cure the Defaults and providing for an advance to the Company of Six Million and no/100’s Dollars ($6,000,000.00) of cash for use as working capital (the “Working Capital Infusion”). The Owl Creek Investors consent to the execution and delivery of the Monroe/Fortress Facility Amendment in substantially the form that has been delivered by LJH to the Owl Creek Investors, pursuant to the Participation Agreement, agree to fund One Million, One Hundred Sixty-eight Thousand, Eight Hundred and no/100s Dollars ($1,168,800.00) (19.48%) of the Working Capital Infusion, subject to the terms and conditions stated therein. Such payment by the Owl Creek Investors will be made by wire of immediately available funds to the account designated by LJH to the Owl Creek Investors in a written notice

provided to the Owl Creek Investors not less than twenty-four (24) hours prior to the funding of the Working Capital Infusion contemplated by the Monroe/Fortress Facility Amendment. Any modification of the Monroe/Fortress Facility Amendment will be subject to the consent of each of the Investors, not to be unreasonably withheld.

2.3 Organization and Capitalization of Newco.

(a) LJH has organized Newco on April 10, 2006 pursuant to the certificate of incorporation and bylaws attached hereto as Exhibit C.

(b) Upon execution of an Agreement and Plan of Merger between Newco and the Company as contemplated by Section 2.4 of this Agreement, (the “Merger Agreement”), LJH and the Owl Creek Investors agree to fund Newco with $10,006,524, representing the product of $4.00 multiplied by the number of issued and outstanding shares of Company Common Stock that are not owned by the Investors plus the number of shares of Company Common Stock that are issuable upon the exercise of existing conversion rights by the holders of the Subordinated Convertible Notes and holders of warrants, options and stock grant rights identified on Exhibit D to this Agreement. Of this amount, LJH will contribute the sum of $8,057,252 (89.52%) in return for the issuance by Newco to LJH of 2,014,313 shares of Newco Common Stock and the Owl Creek Investors will contribute the sum of $1,949,272.00 (19.48%) in return for the issuance by Newco to the Owl Creek Investors of 487,318 shares of Newco Common Stock.

(c) The Investors agree that Newco may, pursuant to the Merger Agreement, deposit the sum of $10,006,524 in an escrow account subject to the terms of an Escrow Agreement between Newco and the Company (the “Escrow Agreement”) in substantially the form that has been delivered by LJH to the Owl Creek Investors, to be disbursed as provided in the Escrow Agreement and the Merger Agreement. Any modification of the Escrow Agreement will be subject to the consent of each of the Investors, not to be unreasonably withheld.

(d) On or before the date that is two business days prior to the closing contemplated by the Merger Agreement, and subject to the satisfaction of the conditions to closing set forth in this Agreement in Section 2.6(f) and in the Merger Agreement, the Investors will contribute all shares of Company Common Stock owned by them to Newco. LJH will contribute 15,385,812 shares of Company Common Stock to Newco in return for the issuance by Newco to LJH of 15,385,812 shares of Newco Common Stock and the Owl Creek Investors will contribute an aggregate of 3,722,399 shares of Company Common Stock to Newco in return for the issuance by Newco to the Owl Creek Investors of 3,722,399 shares of Newco Common Stock.

(e) On or before the date that is two business days prior to the closing contemplated by the Merger Agreement, and subject to the satisfaction of the condition to closing set forth in this Agreement in Section 2.7, LJH will endeavor to cause the Company to exchange of the principal balance of the Working Capital Infusion for 2,400,000 shares of the Company’s Common Stock pursuant to the Merger Agreement. The Investors agree to contribute all of such shares to Newco, of which 1,932,480 (80.52%) shares of Company Common Stock will be deemed contributed to Newco by LJH in return for the issuance by Newco to LJH of 1,932,480 shares of Newco Common Stock and 467,520 (19.48%) shares of Company Common Stock will be deemed contributed to Newco by the Owl Creek Investors in return for the issuance by Newco

to the Owl Creek Investors of 467,520 shares of Newco Common Stock. LJH is authorized to take all reasonably necessary actions on behalf of the Investors to effect the transactions described in this Subparagraph (e); provided that before taking such actions LJH will provide the Owl Creek Investors with reasonable notice of such actions and a reasonable opportunity to review and consult in taking such actions.

(f) The ownership of the Newco Common Stock issued to the Investors will be subject to the Stockholders Agreement by and among Newco and the parties named therein (the “Stockholders Agreement”) and the Registration Rights Agreement by and among Newco and the parties named therein (the “Registration Rights Agreement”), attached to this Agreement as Exhibit E and Exhibit F respectively, which have been executed and delivered simultaneously with this Agreement.

(g) The closing (the “Closing”) of each issuance of Newco Common Stock described in this Section 2.3 shall take place at the offices of Bracewell & Giuliani LLP, 500 N. Akard, Suite 4000, Dallas Texas on the dates specified above or at such other place and time as the Investors may otherwise agree. At each closing, Newco will issue to each of the Investors certificates for the indicated number of shares of Newco Common Stock in such denominations as any of them may specify and each of the parties will execute and deliver such certifications, receipts and acknowledgements as any of the parties may reasonably request to evidence such actions.

2.4 Merger Agreement. The Investors have initiated negotiations with the Company with respect to a proposed form of Merger Agreement. The final form of the Merger Agreement the Escrow Agreement the Amendment to Financing Agreement will be subject to the consent of each of the Investors, not to be unreasonably withheld. The Investors and Newco each agree to vote all shares of Company Common Stock, and the Investors agree to vote all shares of Newco Common Stock, owned by them to approve the Merger and any other matters submitted to a vote of the shareholders of the Company or of Newco in connection with any meeting of the Company’s or Newco’s shareholders held to consider and vote upon the Merger.

2.5 SEC Filings. Each of the Investors agree to promptly file an amendment to their respective Schedule 13D’s with the SEC disclosing their agreement to pursue the transactions described in this Agreement and to provide each party to this Agreement with prompt notice of any development which would under applicable rules require an amendment to their respective Schedule 13D’s. LJH agrees that it will include Newco as a part of its affiliated group in its Schedule 13D filing. Each of the Investors agree to provide the other with a reasonable opportunity to review and comment on each proposed amendment to its Schedule 13D prior to its filing. The Investors understand that a Schedule 13E-3 filing with the SEC under Rule 13E-3 (the “Schedule 13e-3 Filing”) will be required in order to consummate the exchange of the Working Capital Infusion for 2,400,000 shares of Company Common Stock and consummate the Merger. Newco and the Investors agree to make the Schedule 13E-3 Filing as promptly as practicable after execution of the Merger Agreement but in no event later than 10 Business Days after the date thereof. No filings of, or amendment or supplement to, the Schedule 13E-3 Filing will be made by Newco or the Investors without providing the Investors a reasonable opportunity to review and comment thereon. Each of the Investors agrees to promptly provide the information reasonably required for inclusion in each filing with the SEC necessary to

consummate the transactions contemplated herein, and represents and warrants to the other parties to this Agreement that all such information provided solely with respect to such party will be true and correct in all material respects and will not misstate any material fact or omit to state any material fact required to be stated therein, in light of the circumstances in which they were made, in order that the information provided will not be misleading.

2.6 Conditions to Closing for the Investors. The Investors’ several obligations to take the actions described in Section 2.1, 2.2, 2.3 and 2.4 of this Agreement on the dates contemplated therein (each such date being a “Closing Date”) are subject to the satisfaction, on or prior to each such Closing Date, of the conditions set forth in the Related Agreement corresponding to such Closing Date and of the following conditions:

(a) Representations and Warranties Correct. The representations and warranties made by each of the parties herein shall have been true and correct when made and shall be true and correct on and as of the applicable Closing Date with the same force and effect as though made on and as of the Closing Date, except for any representations and warranties that are made as of a specific date which shall only be required to be true and correct as of such date.

(b) Performance. All covenants, agreements and conditions contained in this Agreement to be performed or complied with by each of the Investors on or prior to the applicable Closing Date shall have been performed or complied with.

(i) the Certificate of Incorporation of Newco, certified by the Secretary of State of the State of Delaware, and copies of the Bylaws of Newco, certified by the Secretary of Newco;

(ii) resolutions of the Board of Directors of Newco, the form and substance of which are reasonably satisfactory to the Investors, authorizing any actions being taken by Newco in connection with such Closing.

(d) Board of Newco. As of the initial Closing Date, the Board of Directors of Newco shall be constituted in accordance with the Stockholders Agreement.

(e) Consents. All consents and approvals to the transactions contemplated by this Agreement required to be obtained from any third party shall have been obtained.

(f) Legality. All authorizations, approvals or permits of any governmental authority or regulatory body that are required in connection with such action shall have been duly obtained and shall be in full force and effect.

(g) General. All instruments and legal and organizational proceedings in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Investors, and the Investors shall have received copies of all documents, including records of company proceedings and officers’ certificates, which they may have reasonably requested in connection therewith.

2.7 Conditions to Issuance of Company Stock. The right and obligation of the Investors and TAS to (a) consummate the exchange of the principal balance of the Working Capital Infusion for the issuance of up to 2,400,000 shares of Company Common Stock pursuant to Section 2.3(e) of this Agreement, and (b) consummate the Merger contemplated by the Merger Agreement, are expressly subject to satisfaction of the condition that all required filings with the SEC by the Company, TAS and its Affiliates shall have been made, and all related deliveries of documents to the stockholders of the Company and the passage of notice periods required under the Exchange Act, shall have occurred, including those contemplated by Sections 14(a) and 13(e) of the Exchange Act and the rules and regulations thereunder, to the extent applicable.

2.8 Conditions to Funding. The obligation of the Investors and TAS to consummate the transactions contemplated by Sections 2.2, 2.3(b), (c), (d) and (e) and Section 2.4 are subject to the execution and delivery of each of the Related Agreements in the form approved by the Investors, such approval not to be unreasonably withheld.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

LJH hereby represents and warrants to the Owl Creek Investors and Newco, and each of the Owl Creek Investors, jointly and severally, hereby represents and warrants to LJH and Newco, as follows:

3.1 Organization. It is duly organized and validly existing and in good standing under the laws of its state of organization.

3.2 Organizational Power. It has all necessary power and authority to enter into and perform this Agreement and the Related Agreements to which it is a party, to own all the properties owned by it and to carry on the businesses now conducted or presently proposed to be conducted by it. It has taken all action necessary to authorize this Agreement and the Related Agreements to which it is a party.

3.3 Authorization. All approval and action on the part of such Investor by its owners and its governing body necessary for the due authorization, execution and delivery of this Agreement and the Related Agreements to which it is a party and the consummation of the transactions contemplated herein and therein has been or will be taken. This Agreement and the Related Agreements to which such Investor is a party are legal, valid and binding agreements of the Investor, enforceable in accordance with their terms. The execution, delivery and performance by such Investor of this Agreement and the Related Agreements to which it is a party will not result in any violation of or be in conflict with, or result in a breach of or constitute a default under, any term or provision of any Legal Requirement to which such Investor is subject, its organizational documents, or any Contractual Obligation to which such Investor is a party or by which it is bound.

3.4 Accredited Investor; Investment. It is an “accredited investor” for purposes of Regulation D under the Securities Act and that it has sufficient knowledge and experience in evaluating and investing in companies similar to Newco and the Company so as to be able to evaluate the risks and merits of its investment in Newco and the Company and is able financially to bear the risks thereof. Each Investor acknowledges that an investment in Newco and in the Company involves a substantial degree of risk of loss of such Investor’s entire investment and that there is no assurance of any income from such investment. It is acquiring the Newco Common Stock and Company Common Stock described herein for investment, for its own account and not with a view to, or for resale in connection with, any distribution thereof, and that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same.

3.5 Title; No Adverse Claims. The Company Common Stock contributed to Newco by such Investor as contemplated by Section 2.3 of this Agreement is owned by such Investor of record and beneficially and is being conveyed to Newco free of all adverse claims.

3.6 Litigation. As of the date of this Agreement, no litigation or proceeding before, or investigation by, any foreign, federal, state or municipal board or other governmental or administrative agency or any arbitrator is pending or, to the Investor’s knowledge, threatened, against such Investor with respect to its ownership of Company Common Stock or the transactions contemplated by this Agreement.

3.7 Consents. No consent, approval, qualification, order or authorization of, or filing with any governmental authority is required in connection with such Investor’s valid execution, delivery or performance of this Agreement and the Related Agreements to which it is a party, except as expressly contemplated herein or in the Related Agreements.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF NEWCO

Newco represents and warrants to each Investor as follows:

4.1 Organization. Newco is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware.

4.2 Company Power. Newco has all necessary corporate power and authority to enter into and perform this Agreement and the Related Agreements to which it is a party, to issue and sell the Newco Common Stock contemplated by this Agreement, to own all the properties owned by it and to carry on the businesses now conducted or presently proposed to be conducted by it. Newco has taken all action necessary to authorize this Agreement, the Related Agreements to which it is a party and the issuance of the Newco Common Stock to be issued and sold hereunder.

4.3 Subsidiaries; Business. Newco has no Subsidiaries. Except for the transactions contemplated by this Agreement, Newco has not conducted any business or entered into any agreement or understanding with any person since the date of its organization.

4.4 Capitalization. Except as contemplated by this Agreement, Newco has no issued or outstanding capital stock nor any obligation to issue its capital stock to any Person. All of the shares of Newco Common Stock to be issued to the Investors pursuant to this Agreement will be, upon consummation of the transactions contemplated by this Agreement, validly issued, fully paid, nonassessable and subject to no lien or restriction on transfer, except restrictions on transfer imposed by the Related Agreements and applicable securities laws.

4.5 Authorization. All securityholder approval and action on the part of Newco necessary for the due authorization, execution and delivery of this Agreement and the Related Agreements to which Newco is a party and the consummation of the transactions contemplated herein and therein, has been or will be taken prior to the applicable Closing Date. This Agreement and the Related Agreements to which Newco is a party are legal, valid and binding agreements of Newco, enforceable in accordance with their terms. Subject to the accuracy of the representations and warranties made by the Investors herein, the execution, delivery and performance by Newco of this Agreement and the Related Agreements to which Newco is a party and the issuance of the Newco Common Stock by Newco to the Investors will not result in any violation of or be in conflict with, or result in a breach of or constitute a default under, any term or provision of any Legal Requirement to which Newco is subject, or Newco’s organizational documents, or any Contractual Obligation to which Newco is a party or by which it is bound.

4.6 Outstanding Debt: Absence of Liabilities. Newco does not have any material liabilities or obligations, contingent or otherwise, which are not described in this Agreement.

4.7 Litigation. As of the date of this Agreement, no litigation or proceeding before, or investigation by, any foreign, federal, state or municipal board or other governmental or administrative agency or any arbitrator is pending or, to Newco’s knowledge, threatened against Newco.

4.8 Consents. No consent, approval, qualification, order or authorization of, or filing with any governmental authority is required in connection with Newco’s valid execution, delivery or performance of this Agreement or the Related Agreements to which it is a party, or the offer, issue or sale of the Newco Common Stock to the Investors by Newco, or the consummation of any other transaction pursuant to this Agreement on the part of Newco, except filings expressly contemplated by this Agreement or the relevant Related Agreements.

ARTICLE V

COVENANTS OF THE INVESTORS

5.1 Expenses. Each party to this Agreement will bear its own expenses incurred on its behalf with respect to this Agreement and the Related Agreements, provided that upon the closing of the Merger, the Investors may, pursuant to the Merger Agreement, seek reimbursement of their reasonable expenses, including fees of their respective counsel, from the Company to be allocated 80.52% to LJH and 19.48% to the Owl Creek Investors.

5.2 General Restriction; Permitted Transfers.

(a) General. Except as otherwise provided herein, no Investor shall, directly or indirectly, sell, give, assign, hypothecate, pledge, encumber, grant a security interest in or otherwise dispose of (whether by operation of law or otherwise) (each, a “transfer”) any shares of Company Common Stock (the “Company Shares”) or any right, title or interest therein or thereto. The provisions of this Section 5.2 shall immediately terminate and be null and void upon the earlier of the consummation of the Merger or the termination of the Merger Agreement.

(b) Permitted Transfers. An Investor may transfer Company Shares to (i) an Affiliate of such Investor or (ii) upon the liquidation or dissolution of such Investor, any general or limited partner, member or shareholder of such Investor (each Person referred to in the preceding clauses (i) and (ii) is herein referred to as a “Permitted Transferee”). Any transfer pursuant to this Section 5.2(b) may be effected without complying with the provisions of Section 5.. Upon the consummation of, and as a condition to, any transfer pursuant to this Section 5.2(b), the transferee must execute an Addendum in the form of Exhibit I hereto and thereby become a party to, and be bound by, the terms and provisions of this Agreement. References in this Agreement to Company Shares held or owned by any Investor shall be deemed to include Company Shares held or owned by any such Permitted Transferee(s) and references to actions to be taken by an Investor shall be taken jointly by such Investor and its Permitted Transferee(s).

(c) Pledge or Grant of Security Interest by Investor. An Investor may pledge all or a portion of its Company Shares or grant a security interest therein to secure indebtedness of such Investor or any of its Permitted Transferees owing to a bank, other financial institution or other financing source; provided, however, that the pledge agreements or other related financing agreements of any Investor shall be subject to and acknowledge the rights of the Company and the other Investors set forth herein.

5.3 Notice Prior to Sale; Right of First Refusal.

(a) Information Notice. Except for a transfer permitted by Section 5.2(b) and (c) and subject to compliance with the provisions of Section 5.5, prior to any transfer of Company Shares by an Investor (a “Transferring Investor”), such Transferring Investor shall not approach any bona fide buyer prior to informing the other Investors (the “Other Investors”), in writing (the “Information Notice”) of the Transferring Investor’s desire to seek a buyer after the expiration of ten (10) days from the date of said Information Notice. The Transferring Investor, through its representatives, shall meet or confer with the Other Investors regarding its plans and proposals at reasonable times and places during the ten (10) days following the Information Notice (the “Information Period”). The Owl Creek Investors shall be treated as a single Investor for purposes of this Section 5.3 and Sections 5.4 and 5.5.

(b) Permitted Transfers. Upon the expiration of the Information Period, the Transferring Investor may consummate a sale of the Company Shares by entering within 120 days from the expiration of the Information Period into a definitive agreement with a third party. If any sale to a third party pursuant to this clause (b) is not consummated within 120 days of the date of execution of the applicable purchase agreement, the restrictions provided for herein shall again become effective, and no transfer of the Company Shares may be made thereafter (other

than in a transfer pursuant to Section 5.2(b) and (c)) by the Transferring Stockholder without again notifying the Other Investors in accordance with this Section 5.3.

(i) Except for a transfer permitted by Section 5.2(b) or 5.3(b), if an Investor or a Permitted Transferee (collectively, the “Selling Investor”) desires to sell, dispose of, or otherwise transfer all or any of its Company Shares (the “Specified Shares”) to any Person (the “Proposed Transferee”) that is not an Affiliate or Permitted Transferee of such Investor and who has made an unsolicited bona fide offer to purchase such specified Shares, then, before transferring any of the Specified Shares to such Proposed Transferee, (i) it shall have obtained a bona fide written offer to purchase the Specified Shares at a stated dollar price per share for cash, and (ii) it shall give written notice (the “Option Notice”) to the other Investors. The Option Notice shall:

(1) certify that the Selling Investor has received a bona fide written offer to purchase the Specified Shares and enclose a copy of such offer,

(2) identify the Proposed Transferee who has made such bona fide offer,

(3) state the number of Company Shares the Proposed Transferee has offered to purchase,

(4) state the purchase price per share for the Company Shares to be transferred and other material terms and conditions of the Proposed Transferee’s offer to purchase the Specified Shares, and

(5) state the date on which the Option Notice is being sent (the “Notice Date”).

(ii) On or before the twentieth (20th) day after the Notice Date, any other Investor (the “Exercising Investor”) may exercise an option to purchase all of the Specified Shares for the same purchase price and on the same terms and conditions as the Proposed Transferee’s offer as set forth in the Option Notice. The Exercising Investor shall exercise its option by giving written notice to the Selling Investor (the “Exercise Notice”).

(iii) The closing for the purchase by the Exercising Investor of the Specified Shares under Section 5.3(c) shall be held at 10:00 a.m. at the principal office of the Company, on the date specified in the Exercise Notice (the “Option Closing Date”), which date shall be not earlier than 30 days nor later than 60 days after the date of the Exercise Notice. The purchase price and all other terms for such purchase of the Specified Shares shall be as set forth in the Option Notice. At such closing, the Selling Investor shall deliver certificates representing the Specified Shares, duly endorsed for transfer and accompanied by all requisite stock transfer taxes, if any, against payment of the purchase price therefore, and the Specified Shares shall be free and clear of any liens, charges, claims or encumbrances (other than restrictions imposed pursuant to applicable Federal and state securities laws and restrictions imposed by this Agreement) and the Selling Investor shall so represent and warrant. Each Selling Investor shall

further represent and warrant that it is the record and beneficial owner of the Specified Shares and make such additional representations and warranties as shall be customary in transactions of a similar nature.

(iv) If the other Investor does not elect to purchase all of the Specified Shares set forth in the Option Notice, the Selling Investor may transfer the Specified Shares to the Proposed Transferee named in the Option Notice for the consideration and upon the terms set forth in the Option Notice. The transfer of the Specified Shares to the Proposed Transferee must be consummated within a period of ninety (90) days after the date of the Notice Date. Any transfer after the expiration of such 90-day period and any transfer to a different transferee or for different consideration or upon terms and conditions different from those set forth in the Option Notice shall be null and void.

5.4 Tag Along Rights.

(a) LJH may not and shall cause its Affiliates not to, transfer any Company Shares other than to a Permitted Transferee if such transactions, together with all Company Shares previously transferred by LJH to one or more third parties, would, if consummated, result in LJH transferring more than 25% of the aggregate number of Company Shares held by LJH (without giving effect to any previous transfers pursuant to Section 5.2(b) or (c) or this Section 5.4), unless each of the Owl Creek Investors are offered a right to sell (the “Tag Along Right”) their Company Shares in such transfer with LJH. Any sale pursuant to this Section 5.4 shall be made after compliance with the provisions of Section 5.3(a).

(b) At least 20 days prior to any such transfer, LJH will deliver a sale notice to the Owl Creek Investors specifying the identity of the prospective transferee(s) and disclosing in reasonable detail the number of Company Shares, the price, which shall be payable solely in cash at the closing of the transaction or in installments over time, a good faith estimate of the costs for such transfer and other terms and conditions of the proposed transfer, including, without limitation, the expected aggregate holdings (in terms of dollars and percentage) by LJH of the Company Shares immediately after consummation of such proposed transfer. The Owl Creek Investors who elect to participate in the proposed transfer (the “Tag Along Investors”) shall deliver written notice of their election to participate to LJH prior to the expiration of such 20-day period.

(c) Each Tag Along Investor will be entitled to sell in such proposed transfer, at the same price and on the same terms as LJH, a number of Company Shares equal to the product of (x) the quotient determined by dividing the number of Company Shares then held by such Tag Along Investor by the aggregate number of Company Shares held by LJH and all Tag Along Investors multiplied by (y) the number of Company Shares to be sold in such proposed transfer. The number of Company Shares proposed to be transferred by LJH in the current transfer shall be reduced to the extent necessary to provide for the sale of Company Shares by each Tag Along Investor exercising its rights hereunder.

(d) Permitted Transfer. LJH and the Tag Along Investors may transfer the Company Shares at the price and on the terms and conditions set forth in the sale notice for a period of 60 days from the expiration of the 20-day period commencing on the date of delivery

of the sale notice to the other Investors. Any Company Shares not transferred within such period again shall be subject to the provisions of this Section 5.4 in connection with any subsequent transfer.

(e) Failure to Exercise Option. The failure of any Investor to give written notice as specified in this Section 5.4 within the time period specified herein shall be deemed to be a waiver of its rights under this Section 5.4.

ARTICLE VI

MISCELLANEOUS

6.1 Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand or by messenger addressed:

If to LJH or to Newco, to it at 377 Neva Lane, Denison, TX 75020 attention: Mr. Lacy Harber, telecopy: (903) 465-6514, with a copy to Bracewell & Giuliani, LLP, 500 N. Akard Street, Suite 4000, Dallas, Texas 75201-3387, attention: Michael W. Tankersley, Esq., telecopy (214) 758-8366, or at such other address as LJH or Newco shall have specified by notice to the other parties to this Agreement.

If to any of the Owl Creek Investors, to it at 640 Fifth Avenue, 20^th Floor, New York, NY 10019, attention: Mr. Daniel Sapadin, with a copy to Schulte Roth & Zabel, LLP, 919 Third Avenue, New York, NY 10022 , attention: Peter J. Halasz, Esq., telecopy: (212-593-5955.

All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business day after being delivered by facsimile or e-mail (with receipt of appropriate confirmation), (iv) one business day after being deposited with an overnight courier service of recognized standing or (v) 72 hours after being deposited in the U.S. mail, first class with postage prepaid. In the event of any conflict between the Company’s books and records and this Agreement or any notice delivered hereunder, the Company’s books and records will control absent fraud or error.

6.2 Press Releases. The Investors shall agree on the form of each press release by any of them or by Newco related to this Agreement or the transactions contemplated hereby to the extent that any such press release references an Investor or an Affiliate of such Investor.

6.3 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Investors.

6.4 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the personal representatives, successors and assigns of the respective parties hereto. Newco shall not have the right to assign its rights or obligations hereunder or any interest herein without obtaining the prior written consent of the Investors and any attempted assignment

otherwise shall be void; obligations of Newco set forth herein shall not be applicable to the Company following consummation of the Merger and the Company shall not, as a consequence of the Merger, become a party to this Agreement. The Investors may assign or transfer their rights under this Agreement to the extent permitted herein and by the other agreements between the respective parties and the Company. Whether or not any express assignment has been made in this Agreement, provisions of this Agreement that are for the Investors’ benefit as the holder of any Company Common Stock are also for the benefit of, and enforceable by, all subsequent holders of the Company Common Stock.

6.5 General. The invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof. The headings in this Agreement are for convenience of reference only and shall not alter or otherwise affect the meaning hereof. This Agreement, the Related Agreements and the other written agreements of the parties referred to herein or therein constitute the entire understanding of the parties hereto with respect to the subject matter hereof and thereof and supersede all present and prior agreements, whether written or oral. This Agreement shall be governed by and construed in accordance with the laws (other than the conflict of laws rules) of the State of Delaware, and shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

6.6 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. One or more counterparts of this Agreement or any Exhibit or Schedule hereto may be delivered via facsimile and such facsimile counterpart shall have the same effect as an original counterpart hereof.

6.7 Cawthron Employment. Each of the Investors shall negotiate in good faith and mutually agree upon the terms and conditions of employment for Mr. John Cawthron with the Company, based on the terms and conditions orally discussed as of the date hereof among the Investors.

6.8 Governing Law; Jurisdiction. The laws of the State of Delaware, without reference to conflict of laws principles, shall govern the validity, construction and interpretation of this Agreement. Each party to this Agreement hereby irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or any agreements or transactions contemplated hereby may be brought exclusively in the courts of the State of Delaware and hereby expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the address provided in accordance with Section 6.1, such service to become effective 10 days after such mailing.

[Signature pages follow]

The undersigned have executed this Transaction Agreement as of the date first above written.


		TAS HOLDING, INC.

		By: /s/ John Cawthron
		Name:		John Cawthron
		Title:		President

		LJH, LTD.
		By: DLH Management, LLC, its general partner

		By:
		Name:		Lacy Harber
		Title:		President

		OWL CREEK I L.P.
				By: Owl Creek Advisors, LLC its General Partner

		By: /s/ Jeffrey Altman
		Name:		Jeffrey Altman
		Title:		Managing Member

		OWL CREEK II L.P.
				By: Owl Creek Advisors, LLC its General Partner

		By: /s/ Jeffrey Altman
		Name:		Jeffrey Altman
		Title:		Managing Member

		OWL CREEK OVERSEAS FUND LTD.

		By: /s/ Jeffrey Altman
		Name:		Jeffrey Altman
		Title:		Director

		OWL CREEK OVERSEAS FUND II, LTD.

Exhibit D to Transaction Agreement.

Summary of Outstanding Common Stock, Options, Warrants, Conversion Rights of TIMCO Aviation Services, Inc. and TAS Holding, Inc.


Shareholders	No. of shares		Payoff @ $4
LJH		15,385,812		0
Owl Creek		3,722,399		0
Public Shareholders		2,333,299	$	9,333,196

Total shares outstanding		21,441,510

LJH Warrant		47,125		188,500
New Sr. Conv Notes due 12/31/2006		71,219		284,876
Junior Conv Notes due 1/2/2007		38,738		154,952
Restricted shares per West Emp. Ag.		11,250		45,000
Subtotal of conversion/warrant rts.		168,332		673,328
Subtotal of purchased shares		2,501,631	$	10,006,524
Total		21,609,842

TAS Holding, Inc. Share Issuances


Shareholders	No. of shares		Consideration
LJH — exchange of TIMCO shares		15,385,812	15,385,812 TIMCO Shs
Owl Creek — exchange of TIMCO shares		3,722,399	3,722,399 TIMCO Shs
Subtotal		19,108,211	19,108,211 TIMCO Shs
Cash Capital Contribution to Newco
Portion to LJH (80.52%)		2,014,313	$	8,057,252
Portion to Owl Creek Investors (19.48%)		487,318		1,949,272
Subtotal		2,501,631	$	10,006,524

Exchange of Working Cap. Infusion
Portion to LJH (80.52%)		1,932,480	$	4,831,200
Portion to Owl Creek Investors (19.48%)		467,520		1,168,800
Subtotal		2,400,000	$	6,000,000
Total Newco Shares		24,009,842

EX-99.3 4 d34971exv99w3.htm ASSIGNMENT AND ACCEPTANCE exv99w3

Exhibit 99.3

ASSIGNMENT AND ACCEPTANCE

Reference is made to the Amended and Restated Financing Agreement dated as of April 8, 2005 (as amended and otherwise modified to the date hereof, the “Financing Agreement”) among Monroe Investments, Inc. (“Monroe Investments”), Monroe Capital Advisors LLC (“Monroe Capital”, and together with Monroe Investments, “Monroe”) and Fortress Credit Opportunities I LP (“Fortress”, and together with Monroe, the “Assignors”) and TIMCO Aviation Services, Inc. and certain of its affiliates parties thereto (collectively, the “Companies”). Capitalized terms not otherwise defined herein shall have the same meanings as specified therefor in the Financing Agreement.

SECTION 1. Each of the Assignors hereby sells and assigns, without recourse except as to the representations and warranties made by it herein, to LJH, Ltd. (the “Assignee”), and the Assignee hereby purchases and assumes from the Assignors, all of the Assignors’ rights, interests and obligations in and under the Financing Agreement and the other Loan Documents as of the Effective Date (as hereinafter defined) other than the Retained Interest (as hereinafter defined) (the “Assigned Interest”). After giving effect to such sale and assignment, the Assignee shall be the sole “Lender” under the Financing Agreement and all of the other Loan Documents.

SECTION 2. Each of the Assignors represents and warrants solely as to itself that (a) it has not sold, assigned or otherwise transferred any right or interest, whether legal, beneficial or otherwise, in the Notes (as hereinafter defined), the Obligations or any other rights or obligations under the Financing Agreement or the other Loan Documents to any Person other than the Assignors; (b) it has the full power and authority, and have taken all action necessary, to execute and deliver this Assignment and Acceptance, and to perform its obligations hereunder; and (c) no governmental or third party approvals or consents are required for it to execute and deliver this Assignment and Acceptance, and to perform its obligations hereunder.

SECTION 3. The Assignors represent and warrant that (a) they are the legal and beneficial owners of the Assigned Interest and that such Assigned Interest is free and clear of any lien, encumbrance or other adverse claim; (b) other than as provided herein, make no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Financing Agreement or any of the other Loan Documents, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Financing Agreement or any of the other Loan Documents, or any other instrument or document furnished pursuant thereto; and (c) make no representation or warranty and assumes no responsibility with respect to the financial condition of any of the Companies or any of their affiliates or the performance or observance by any of the Companies of any of their Obligations, or any other instrument or document furnished pursuant thereto.

SECTION 4. The Assignee (a) represents and warrants that its name set forth on the signature pages hereof is its legal name; (b) confirms that it has received a copy of the Financing Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (c) agrees that it has made and will continue to make, independently and without reliance upon the either Assignor and based on such documents and information as it shall deem appropriate at the time, its own credit decisions in taking or not taking action under the Financing Agreement and the other Loan Documents; (d) confirms that it is eligible as an assignee under the terms of the Financing Agreement and the other Loan Documents; and (e) agrees that, from and after the Effective Date, it will be bound by the provisions of the Financing

Assignment and Acceptance

Agreement and the other Loan Documents and it will perform in accordance with their terms all of the obligations that by the terms of the Financing Agreement and the other Loan Documents are required to be performed by it as the Lender.

SECTION 5. Upon the request of the Assignee, at the sole cost and expense of the Borrowers, Monroe hereby agrees to execute and deliver, or to cause to be executed and delivered, such assignments and other instruments of transfer as may be reasonably requested by the Assignee to effectuate the intent and purposes, and to carry out the terms, of this Assignment and Acceptance, and to further assign and transfer to the Assignee the liens and security interests created pursuant to the Loan Documents, and such assignments and instruments of transfer shall be in proper form for recording in the appropriate filing and recording offices. Monroe hereby authorizes the Assignee to make such filings (including the filings of UCC-3 assignments) as are necessary to make the assignments contemplated hereby in the appropriate jurisdictions. Monroe hereby agrees to deliver to the Assignee on the Effective Date all possessory Collateral and all Loan Documents in Monroe’s possession.

SECTION 6. [RESERVED]

SECTION 7. Each of the Companies and the Guarantors hereby waives any obligation of the Assignee to attach to this Assignment and Acceptance or otherwise deliver to any or all of the Borrowers the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee’s status for purposes of determining exemption from the United States withholding taxes with respect to all payments to be made to the Assignee under the Financing Agreement or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty.

SECTION 8. (a) The Assignors acknowledge that (i) the Assignee may now possesses and may hereafter possess certain non-public information concerning the Companies, the Loan Documents and the transactions contemplated thereby, that may or may not be independently known by the Assignors, and which may constitute material information with respect to the foregoing; (ii) the Assignee has no obligation to furnish the non-public information to the Assignors; and (iii) the Assignors have adequate information concerning the Loan Documents and the business and financial condition of the Companies to make an informed decision regarding entering into this Assignment and Acceptance.

(b) The Assignee acknowledges that (i) one or more of the Assignors may now possess and may hereafter possess certain non-public information concerning the Companies, the Loan Documents and the transactions contemplated thereby, that may or may not be independently known by the Assignee, and which may constitute material information with respect to the foregoing; (ii) the Assignors have no obligation to furnish the non-public information to the Assignee; and (iii) the Assignee has adequate information concerning the Loan Documents and the business and financial condition of the Companies to make an informed decision regarding entering into this Assignment and Acceptance.

SECTION 9. The Assignors and the Assignee hereby acknowledge and agree that the Intercreditor Agreement dated as of April 5, 2004 (as amended and otherwise modified to the date hereof, the “Intercreditor Agreement”) between The CIT/Group/Business Credit, Inc. and Hilco Capital LP remains in full force and effect, and that by entering into this Assignment and Acceptance, the Assignee agrees that it and each of its successors and assigns shall be bound by the terms and conditions of the Intercreditor Agreement.

SECTION 10. Upon the occurrence of the Effective Date, each of the Assignors, the Assignee and the Companies, for itself and on behalf of each of its subsidiaries, successors and assigns, hereby expressly, absolutely, unconditionally and forever waives, releases and discharges any and all of

the Released Claims (as hereinafter defined) any of them may have or allege to have (and all defenses which may arise out of any of the foregoing), against any or all of the Assignors, the Assignee and the Companies, and their respective affiliates, equityholders and “controlling persons” (within the meaning of the United States federal securities laws) and their respective successors and assigns and each and all of the employees, directors, officers, attorneys, agents and other representatives of each of the foregoing (collectively, the “Released Parties”), based in whole or in part on any facts relating to the Released Claims, whether known or unknown. As used herein, the term “Released Claims” means any and all claims (including, without limitation, cross-claims, counterclaims, right of setoff and recoupment), causes of actions, demands, suits, costs, expenses and damages of any nature, description or kind whatsoever (“Claims”), whether known or unknown, whether now or hereafter arising, and whether arising in law or at equity, for or resulting from any matter of things done, omitted or suffered to be done by any of the Released Parties up to and including the Effective Date which relate to the Obligations, the Loan Documents, any use or proposed use of the Loans or the proceeds thereof, or any of the other transactions contemplated hereby or thereby; provided, that the Released Claims shall not include Claims (a) for or relating to the Retained Interest, (b) among or between one or more of the Companies, the Assignee and/or their respective subsidiaries, affiliates, officers, attorneys, agents or representatives, (c) relating to the obligations of the Companies and the Assignee under the Loan Documents, including the liens and security interests securing the Obligations, and (d) relating to the representations and warranties set forth in Sections 2, 3 and 4, and the agreements set forth in Section 5, of this Assignment and Acceptance

SECTION 11. The Effective Date shall be the first date on which each of the following conditions are satisfied, which date shall occur no later than April 10, 2006: (a) this Assignment and Acceptance shall have been duly executed and delivered by each of the parties hereto; (b) all amounts reflected on Schedule I hereto (the “Purchase Price”) as owing to the Assignors, whether from the Borrowers or the Assignee, shall have been deposited in immediately available funds to the account of Monroe Capital Advisors LLC maintained by Lasalle National Bank N.A. at its offices at 135 S. LaSalle Street, Chicago, IL 60603, ABA No. 071-000-505, Account No. 5800969056, Reference: Monroe Capital Advisors Funding Act.; and (c) the Notes owing to or otherwise held by the Assignors and described on Schedule II hereto (the “Notes”) shall have been delivered to the Assignee, together with duly executed endorsements thereto. Upon such execution, delivery, payment and receipt, from and after the Effective Date, (a) the Assignee shall be a party to the Financing Agreement and, to the extent that rights and obligations under the Financing Agreement have been assigned to it pursuant to this Assignment and Acceptance, have the rights and obligations of the Lender thereunder; (b) the Assignors shall, to the extent that any rights and obligations under the Financing Agreement have been assigned by it pursuant to this Assignment and Acceptance, relinquish their rights (other than their rights (such rights being the “Retained Interest”) under Section 7.12 of the Financing Agreement (and other comparable provisions of the other Loan Documents that are specified under the terms of such other Loan Documents to survive the payment in full of the Obligations) to the extent that any claim thereunder relates to an event arising prior to the Effective Date but excluding claims solely between the Assignors) and be released from their obligations, and the Assignors shall cease to be a party thereto; provided, that the Retained Interest does not include legal fees relating from a dispute among Assignors and Assignee caused solely by a breach of this Assignment Agreement; and (c) the Companies shall make all payments under the Financing Agreement and the Notes in respect of the Assigned Interest (including, without limitation, all payments of principal, interest and the fees with respect thereto) to the Assignee.

SECTION 12. To the extent Fortress Credit Opportunities I LP or Monroe Investments, Inc. is considered a legal or beneficial owner or holder of the Notes, each hereby consents to and instructs Monroe Capital Advisors LLC to endorse and deliver the Notes to Assignee on its behalf. Monroe confirms and agrees that the General Assignment Agreement dated as if April 8, 2005, executed and delivered by Hilco Capital LP in favor of Monroe Capital is a “Loan Document” for purposes of the assignment by Monroe Capital in Section 1.

SECTION 13. The Assignee hereby agrees to indemnify, defend, and hold the Assignors and any employee, officer, director, affiliate, parent, attorney or agent of the Assignors (each, an “Indemnified Person”) harmless of and from any loss or liability arising from failure by Assignee to provide Monroe with an original counterpart of the Financing Agreement within ten (10) Business Days after Monroe’s request therefor in connection with litigation involving a claim by an Assignor for indemnification thereunder (as well as from reasonable attorneys’ fees and expenses in connection therewith). The Assignee, by executing this Assignment and Acceptance where indicated below, acknowledges and agrees that its liability and obligations under this Section 13 shall continue in full force and effect until specifically terminated in writing by a duly authorized officer of the Assignors.

SECTION 14. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 15. This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Assignment and Acceptance hereto by telecopier email shall be effective as delivery of an originally executed counterpart of this Assignment and Acceptance. All representations, warranties, covenants and other provisions made by the parties hereto shall be considered to have been relied upon by the parties hereto, shall be true and correct in all material respects as of the Effective Date, and shall survive the execution, delivery and performance of this Assignment and Acceptance.

[remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Assignors, the Assignee and TIMCO Aviation Services, Inc. have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized, as of the date specified hereon.

ASSIGNORS


		MONROE CAPITAL ADVISORS, LLC, as Assignor

		By
			Name:
			Title:

		MONROE INVESTMENTS, INC., as Assignor

		By
		Name:
		Title:

		FORTRESS CREDIT OPPORTUNITIES I LP, as Assignor

		By
		Name:
		Title:

Assignment and Acceptance


		ASSIGNEE

		LJH, LTD., as Assignee

		By: DLH Management, LLC, its general partner

		By:
		Name:
		Title:


COMPANIES

Agreed and Approved this 10th day of April, 2006

TIMCO AVIATION SERVICES, INC.

By
Name:
Title:

AIRCRAFT INTERIOR DESIGN, INC.

By
Name:
Title:

BRICE MANUFACTURING COMPANY, INC.

By
Name:
Title:

TIMCO ENGINE CENTER, INC.

By
Name:
Title:

TIMCO ENGINEERED SYSTEMS, INC.

By
Name:
Title:


TRIAD INTERNATIONAL MAINTENANCE CORPORATION

By
Name:
Title:

AVIATION SALES DISTRIBUTION SERVICES COMPANY

By
Name:
Title:

AVIATION SALES LEASING COMPANY

By
Name:
Title:

AVIATION SALES PROPERTY MANAGEMENT CORP.

By
Name:
Title:

AVS/CAI, INC.

By
Name:
Title:

AVS/M-1, INC.

By
Name:
Title:

AVS/M-2, INC.

By
Name:
Title:

AVS/M-3, INC.

By
Name:
Title:


AVSRE, L.P.

		By: Aviation Sales Property Management Corp, its general partner

By
Name:
Title:

HYDROSCIENCE, INC.

By
Name:
Title:

TMAS/ASI, INC.

By
Name:
Title:

WHITEHALL CORPORATION

By
Name:
Title:

Schedule I
to
ASSIGNMENT AND ACCEPTANCE


			ACCRUED INTEREST
LOAN TYPE	LOAN BALANCE		(Current & PIK)		TOTAL DUE
Term Loan A-1	$	8,158,314.57	$	31,979.75	$	8,190,294.32
Term Loan A-2	$	7,138,507.47	$	27,982.20	$	7,166,489.67
Term Loan B	$	2,627,508.00	$	9,496.71	$	2,637,004.71

TOTALS:	$	17,924,330.04	$	69,458.66	$	17,993,788.70
	PREPAYMENT PENALTY:				$	0
	ACCRUED FACILITY FEES:				$	0
	ACCRUED COLLATERAL MANAGEMENT FEES:				$	0
	ACCRUED SUCCESS FEES:				$	0
	ACCRUED LEGAL FEES/EXPENSES				$	0
	ACCRUED DEFAULT INTEREST				$	319,466.38
	TOTAL PURCHASE PRICE				$	18,313,255.08

Schedule II

ASSIGNMENT AND ACCEPTANCE

Notes

Term Note dated as of April 5, 2004 (the “Term Note”) payable to Hilco Capital LP in the principal amount of $8,000,000.

Term Note A-2 dated as of April 8, 2005 payable to Monroe Capital Advisors LLC in the principal amount of $7,000,000.

Term Note B dated as of April 8, 2005 payable to Monroe Capital Advisors LLC in the principal amount of $3,000,000.

EX-99.4 5 d34971exv99w4.htm PARTICIPATION AGREEMENT exv99w4

Exhibit 99.4

PARTICIPATION AGREEMENT

PARTICIPATION AGREEMENT (this “Agreement”) dated as of April 10, 2006 between LJH, LTD., a Texas limited partnership (the “Seller”), and OWL CREEK ASSET MANAGEMENT, L.P. (the “Participant”).

1. Definitions.

1.1. Capitalized terms used herein and not defined herein or in Schedule 1 or Schedule 2 shall have the respective meanings attributed thereto in the Credit Documents. In addition, as used herein, the following terms shall have the following respective meanings:

“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.

“Borrowers” has the meaning given to it in Schedule 1.

“Business Day” means any day that is not (a) a Saturday, (b) a Sunday or (c) any other day on which commercial banks are authorized or required by law to be closed in the City of New York.

“Credit Agreement” has the meaning given to it in Schedule 1.

“Credit Documents” means the Credit Agreement and all guarantees, security agreements, pledge agreements, assignments, mortgages, deeds of trust, letters of credit, reimbursement agreements, blocked account agreements, control agreements, waivers, amendments, modifications, supplements and all agreements, instruments and other documents executed and delivered in connection therewith.

“Closing Date” means April 10, 2006.

“Federal Funds Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Parties from three federal funds brokers of recognized standing selected by the Parties. For a day that is not a Business Day, the Federal Funds Rate shall be the rate applicable to federal funds transactions on the immediately preceding day for which such rate is reported.

“Future Loan” means each advance or loan outstanding on the Closing Date or hereafter made pursuant to the Specified Commitments.

“Loans” means, collectively, (a) the Loans in the amounts specified in Schedule 1 and (b) the Future Loans, and includes in each case the notes (if any) evidencing such Loans issued under the Credit Agreement.

“Obligors” means, collectively, the Borrowers and each guarantor, pledgor, collateral grantor, or other Person directly or indirectly obligated in respect of the Loans, including each of the Guarantors Party to the Credit Agreement.

“Participant’s Account” has the meaning given to it in Schedule 2.

“Participant’s Percentage” has the meaning given to it in Schedule 2.

“Participant’s Share” means, with respect to any Loan or payment, an amount equal to the Participant’s Percentage of the principal amount of such Loan or the amount of such payment, as applicable.

“Participation” has the meaning given to it in Section 2.

“Party” means the Participant or the Seller, as applicable.

“Person” means any individual, corporation, estate, trust, business trust, joint venture, association, partnership, limited liability company, government, government agency or political subdivision or other legal entity.

“Purchase Price” has the meaning given to it in Schedule 2.

“Specified Commitments” has the meaning given to it in Schedule 1.

“Seller’s Account” has the meaning given to it in Schedule 2.

“Shareholders Agreement” has the meaning specified in the Transaction Agreement.

“Transaction Agreement” means the Transaction Agreement of even date herewith among LJH, Ltd., Owl Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas Fund, Ltd., Owl Creek Oversees Fund II, Ltd. and TAS Holding, Inc.

1.2. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. This Agreement includes the Schedules attached hereto and any documents attached as exhibits to the Agreement. The Schedules attached hereto may supplement, change, or supersede other provisions of this Agreement; if there is any inconsistency between the provisions of said Schedules and the other provisions of this Agreement, said Schedules will prevail. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein or any statute, law, order, rule or regulation shall be construed as referring to such agreement, instrument, other document, statute, law, order, rule or regulation as from time to time amended,

supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof and (d) all references herein to Sections and Schedules shall be construed to refer to Sections of, and Schedules to, this Agreement. Section, Schedule and other headings and captions are included solely for convenience of reference and are not intended to affect the interpretation of any provisions of this Agreement. This Agreement shall be deemed to have been jointly drafted and no provision of it shall be interpreted or construed for or against any Party because such Party purportedly prepared or requested such provision, any other provision or this Agreement as a whole.

2. Sale of Participation. Subject to the terms and conditions set forth in this Agreement, the Seller hereby agrees to sell, and on the Closing Date does hereby sell, to the Participant, without recourse to or (except to the extent expressly provided herein) representation or warranty whatsoever by the Seller, and the Participant hereby agrees to acquire and assume, and on the Closing Date (or, with respect to Future Loans funded after the Closing Date, on such applicable subsequent date of funding any such Future Loans) does hereby acquire and assume, against payment by the Participant of an amount equal to the Purchase Price, a participation (the “Participation”) consisting of an undivided interest, to the extent of the Participant’s Percentage, in (i) each Loan heretofore made and set forth in Schedule 1, (ii) the Specified Commitments and each Future Loan and (iii) to the extent permitted to be transferred under applicable law, all claims, suits, causes of action and any other right of the Seller (in its capacity as a lender), whether known or unknown, against any Borrower, any other Obligor or any of their respective affiliates, agents, representatives, contractors, advisors or any other Person arising under or in connection with the Credit Documents or that is in any way based on or related to any of the foregoing or the loan transactions governed thereby, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and purchased pursuant to this Agreement.

3. Conditions Precedent.

3.1. The Participant’s obligations to pay the Purchase Price to the Seller and to acquire the Participation on the Closing Date shall be subject to the conditions that (a) the Seller’s representations and warranties in this Agreement shall have been true and correct on the Closing Date, (b) the Participant shall have received this Agreement duly executed on behalf of the Seller, and (c) the conditions precedent in Section 2.5 of the Transaction Agreement shall have been satisfied.

3.2. The Seller’s obligation to sell, transfer, assign, grant, and convey the Participation to the Participant on the Closing Date shall be subject to the conditions that (a) the Participant’s representations and warranties in this Agreement shall have been true and correct on the Closing Date, (b) the Seller shall have received this Agreement duly executed on behalf of the Participant and (c) the Seller shall have received payment of the Purchase Price from the Participant.

4. Payment in Respect of Future Loans. The Seller shall notify the Participant promptly of its receipt of each notice from the Borrowers (or any of them) requesting a Future Loan, specifying therein the amount and date of such Future Loan and the Participant’s Share of such Future Loan. Not later than 11:00 a.m. (New York City time) on the date so specified for such Future Loan the Participant shall pay to the Seller, by deposit into the Seller’s Account, the Participant’s Share of such Future Loan, in like currency and immediately available funds, without set-off, counterclaim or deduction of any kind.

5. Payments to Participant. (a) Promptly upon receipt by the Seller of any payment of principal of or cash interest on any Loan, or any fee, in respect of the Loans or the Specified Commitments, the Seller shall remit to the Participant the Participant’s Share of such payment.

(b) To the extent contemplated by the Credit Agreement, the Seller shall promptly remit to the Participant an amount equal to any payment received by the Seller on account of increased costs, break funding payments or expenses incurred by the Participant in connection with the Participation. In addition, so long as (i) the Participant has notified the Borrowers of the Participation and (ii) the Participant complies with its obligations under Section 9, the Seller shall promptly remit to the Participant an amount equal to any payment received by the Seller on account of taxes incurred by the Participant in connection with the Participation.

(c) The Seller shall be entitled to deduct from payments to be made by it hereunder any overdue amount payable by the Participant to the Seller under this Agreement.

6. Delivery of Documents and Information. (a) The Seller will furnish, or direct the Borrowers to furnish, to the Participant (i) a copy of each certificate, report and financial statement which the Seller shall receive from time to time pursuant to the Credit Agreement, and (ii) promptly after each request by the Participant, a copy of all other agreements, instruments and documents received by the Seller from time to time pursuant to the Credit Documents.

(b) The Seller shall use reasonable efforts to make known to the Participant, as soon as practicable after actual knowledge thereof is acquired by the officer of the Seller primarily responsible for the Seller’s credit relationship with the Borrowers, (i) the existence of any material Event of Default under the Credit Agreement that arises after the Closing Date, and (ii) any material, nonpublic information in the possession of the Seller, which has a material effect on the creditworthiness of the Borrowers. Failure of the Seller to provide any such information referred to in the foregoing clauses (i) and (ii) shall not result in any liability to the Seller or excuse the Participant from the performance of any of its obligations hereunder.

7. Representations and Warranties. Each Party represents and warrants to the other Party (as of the Closing Date) that:

(a) such Party (i) is duly organized and validly existing under the laws of its jurisdiction of organization or incorporation, (ii) is in good standing under such laws and (iii) has full power and authority to execute, deliver and perform its obligations under this Agreement;

(b) such Party’s execution, delivery, and performance of this Agreement have not resulted, and will not result, in a breach of any provision of (i) such Party’s organizational documents, (ii) any statute, law, writ, order, rule or regulation of any governmental authority

applicable to such Party, (iii) any judgment, injunction, decree or determination applicable to such Party or (iv) any contract, indenture, mortgage, loan agreement, note, lease or other instrument by which such Party may be bound or to which any of the assets of such Party are subject; and

(c) (i) this Agreement (A) has been duly and validly authorized, executed, and delivered by such Party and (B) constitutes the legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms, except that such enforceability may be limited by bankruptcy, insolvency, or other similar laws of general applicability affecting the enforcement of creditors’ rights generally and by the court’s discretion in relation to equitable remedies; and (ii) to such party’s knowledge, no notice to, registration with, consent or approval of, or any other action by, any relevant governmental authority or other Person is or will be required for such Party to execute, deliver, and perform its obligations under this Agreement.

8. Non-Recourse; No Liability. (a) The Participation is acquired by the Participant without recourse to the Seller and for the Participant’s own account and risk. The Seller makes no representation or warranty, express or implied, and assumes no responsibility, with respect to the genuineness, authorization, execution, delivery, validity, legality, value, sufficiency, perfection, priority, enforceability or collectibility of any of the Credit Documents or any liens or security interests thereunder. The Seller assumes no responsibility for (i) any representation or warranty made by, or the accuracy, completeness, correctness or sufficiency of any information (or the validity, completeness or adequate disclosure of assumptions underlying any estimates, forecasts or projections contained in such information) provided directly or indirectly by, any Borrower, any other Obligor or any other Person, (ii) the performance or observance by any Borrower or any other Obligor of any of the provisions of the Credit Documents (whether on, before or after the Closing Date), (iii) the filing, recording, or taking of any action with respect to any of the Credit Documents, (iv) the financial condition of the Borrowers, any other Obligor or any other Person or (v) (except as otherwise expressly provided herein) any other matter whatsoever relating to the Borrowers, any other Obligor, any other Person, the Loans or the Participation.

(b) The Participant represents to and agrees with the Seller that the Participant is a sophisticated buyer and has made, independently and without reliance on the Seller, its own analysis of the Borrowers, the other Obligors and the Credit Documents for the purpose of acquiring the Participation, and it has received such additional documents and information (including any syndicate confidential information) as it has deemed necessary for such purpose, and it shall continue to make its own decisions with respect to the Participation without such reliance.

(c) The Participant agrees that the Seller may (subject to the limitations set forth in the next succeeding paragraph), in its sole discretion, exercise or refrain from exercising any right, or take or refrain from taking any action, which the Seller may be entitled to take or assert under any of the Credit Documents and, without limiting the generality of the foregoing, the Seller may take legal action to enforce the Participant’s or the Seller’s interests with respect to any Loan or any of the Credit Documents.

(d) The Participant agrees that the Seller may, in its sole discretion, without prior notice to the Participant, agree to the modification, amendment or waiver of any of the terms of any of the Credit Documents, provided that the Seller shall not, without the Participant’s prior written consent (which consent shall not be unreasonably withheld with respect to clause (v) below), agree to any such modification, amendment or waiver that would (i) reduce the principal amount of or rate of interest on the Loans or any fee payable under the Credit Agreement, (ii) increase or commit to increase the aggregate principal amount of the Loans to the Borrowers, except as otherwise provided with respect to Future Loans, (iii) postpone any date fixed for any payment of principal of or interest on the Loans or any fee payable under the Credit Agreement, (iv) postpone any date fixed for any payment of principal or interest on the Loans or any fee payable under the Credit Agreement, (v) convert, in whole or in part, the Borrowers’ indebtedness under the Credit Documents to any equity security of the Borrowers; provided, however, that the Seller may without the consent of the Participant, exchange the principal amount of Term Loan C for common stock of TIMCO and upon such event the Participant shall receive a portion of such common stock equal to its Participation Percentage, or (vi) release any guaranty or material collateral except as otherwise contemplated by the Credit Documents.

(e) The Seller shall have no liability or responsibility to the Participant except as expressly provided herein and except for its own gross negligence or willful misconduct, and, except to such extent, the Seller shall have no responsibility to the Participant for the failure by the Seller to make any Future Loan or other extension of credit to the Borrowers or the failure by the Seller to comply with any of the Seller’s other obligations to the Borrowers under the Credit Agreement or otherwise. In administering the Participation, the Seller may consult with legal counsel (including counsel for the Borrowers), independent accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in reliance on the advice of any such Person.

(f) The Participant acknowledges that the Seller and its affiliates may have lending, trust or other fiduciary relationships and/or other business relationships, including extensions of credit and advisory arrangements with the Borrowers, the other Obligors and their respective affiliates in addition to the Loans, the Specified Commitments and the Participation.

9. Sharing Expenses; Indemnity. (a) The Participant shall reimburse the Seller, ratably to the extent of the Participant’s Percentage, for any and all costs, expenses, and disbursements, including legal fees, which may be incurred or made by the Seller in connection with the administration of the Credit Documents or any action that may be taken by the Seller to collect the principal of or interest on the Loans in which the Participant is participating or for the preservation or enforcement of any rights conferred by any of the Credit Documents for which the Seller is not reimbursed at any time by or on behalf of the Borrowers. If Seller recovers any amounts for which it has been previously reimbursed by the Participant hereunder, the Seller shall promptly distribute to the Participant its pro rata share thereof.

(b) If the Seller makes a payment to the Participant in respect of an amount that the Seller expects to receive under the Credit Documents, but such amount is not so received, the Participant shall, on demand from the Seller, repay to the Seller its pro rata share of the amount not received, together with interest thereon at the Federal Funds Rate. In the event that, after the Seller has made any payment to the Participant hereunder, any such payment or application is

rescinded or must otherwise be returned or paid over by the Seller for any reason, the Participant shall, upon notice from the Seller, forthwith pay to the Seller the Participant’s Share of such amount so returned or paid over, together with its share of any interest or penalties payable with respect thereto.

(c) The Participant agrees to indemnify the Seller for Participant’s Percentage of any and all losses, liabilities, obligations, damages, penalties, actions, judgments, suits, costs, expenses (including fees and expenses of counsel) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Seller in any way relating to or arising out of the Loans, any Credit Document or any other document, instrument or agreement executed or delivered in connection with the Loans or the transactions contemplated thereby or the administration or enforcement of any of the Credit Documents; provided that the Participant shall not have liability under this indemnity to the extent any of the foregoing arise from the Seller’s gross negligence or willful misconduct.

10. Taxes. If the Participant is not created or organized under the laws of the United States of America or any state thereof (a “Non-U.S. Participant”), it represents that it is entitled to receive any payments to be made to it hereunder without the withholding of any tax and shall furnish to the Seller such forms, certifications, statements and other documents as the Seller may request from time to time to evidence the Participant’s exemption from the withholding of any tax imposed by any jurisdiction or to enable the Seller to comply with any applicable laws or regulations relating thereto. Without limiting the effect of the foregoing, if the Participant is a Non-U.S. Participant, in the event that the payment of interest by any Borrower under the Credit Agreement is treated for United States income tax purposes as derived in whole or in part from sources within the United States of America, the Participant shall furnish to the Seller such forms, certifications, statements or documents as the Seller may reasonably request, duly executed and completed by the Participant as evidence of the Participant’s exemption from the withholding of United States tax with respect thereto. The Seller shall not be obligated to make any payments hereunder to any Non-U.S. Participant in respect of any Loan, until such Non-U.S. Participant shall have furnished to the Seller the requested form, certification, statement or document. In the event that the Non-U.S. Participant is subject to United States withholding taxes and any Borrower or the Seller is held liable for such withholding taxes, such Non-U.S. Participant agrees to promptly reimburse the Seller for any such amount.

11. Payments. All payments by the Seller to the Participant hereunder shall be made to the Participant’s Account in like funds and currency as received by the Seller, without set-off, counterclaim or deduction of any kind. If the applicable payment is received by the Seller not later than 12:00 noon (New York City time) on any day, the corresponding payment shall be made to the Participant not later than 5:00 p.m. (New York City time) on such day, and otherwise not later than 5:00 p.m. (New York City time) on the immediately succeeding Business Day.

12. Nature of Interest. The Participant shall not, by reason of this Agreement and the transactions contemplated hereby, be deemed to have an interest in any property taken as security for the Loans or any other extension of credit by the Seller, or in any property now or hereafter in the Seller’s possession or control (other than an undivided participation interest hereunder in the Participant’s Share of the Loans), or in any deposit held or other indebtedness

owing by it which may be or become security for the Loans, or by reason of the general description contained in any general loan or collateral agreement, or by reason of any right of setoff, counterclaim, banker’s lien or otherwise; provided that if any such property, deposit, indebtedness or any proceeds thereof shall be applied by the Seller to the payment of any amount in which the Participant has an interest hereunder, then the Participant shall be entitled to receive from the Seller an amount equal to its pro rata share thereof as provided herein.

13. Set-off. To the extent contemplated by the Credit Agreement and permitted by law, the Participant shall be entitled to the benefits of any provisions in the Credit Agreement providing for rights of set-off against the Borrowers as though the Participant were a Lender.

14. Miscellaneous.

(a) Entire Agreement; Amendments; Exercise of Rights. This Agreement, the Shareholders’ Agreement, the Transaction Agreement and the other material agreements executed and delivered pursuant to the Transaction Agreement constitute the entire agreement of the Parties with respect to the respective subject matters hereof and supersedes all previous and contemporaneous negotiations, promises, covenants, agreements, understandings and representations on such subjects, all of which have become merged and finally integrated into this Agreement. No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by the Parties and no waiver of any provision of this Agreement, nor consent to any departure by either Party from it, shall be effective unless it is in writing and signed by the affected Party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of a Party to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver hereof by such Party, nor shall any single or partial exercise of any right under this Agreement preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of each Party provided herein (a) are cumulative and are in addition to, and are not exclusive of, any rights or remedies provided by law (except as otherwise expressly set forth in this Agreement) and (b) are not conditional or contingent on any attempt by such Party to exercise any of its rights under any other related document against the other Party or any other Person.

(b) Survival; Successors and Assigns. All representations, warranties, covenants, indemnities and other provisions made by the Parties shall be considered to have been relied upon by the Parties, shall be true and correct in all material respects as of the Closing Date, and shall survive the execution, delivery, and performance of this Agreement. This Agreement, including the representations, warranties, covenants and indemnities contained in this Agreement, shall inure to the benefit of, be binding upon and be enforceable by and against the Parties and their respective successors and permitted assigns. Without prejudice to any restrictions or limitations in the Credit Agreement, the Participation and Seller’s interests in the Loans may be sold, pledged, assigned, subparticipated, or otherwise transferred only with the Seller’s or Participant’s, as the case may be, prior written consent, which consent shall not be unreasonably withheld, provided, however, that no such consent shall be required for a sale, transfer, subparticipation or assignment to an Affiliate of the Participant of the Seller.

(c) Further Assurances. Each Party agrees (i) to execute and deliver, or to cause to be executed and delivered, all such instruments and (ii) to take all such actions as the other Party may reasonably request to effectuate the intent and purposes, and to carry out the terms, of this Agreement, including the procurement of any third-party consents.

(d) Disclosure. Each Party agrees that, without the prior written consent of the other Party, it shall not disclose the contents of this Agreement to any Person, except that any Party may make any such disclosure (a) as required to implement or enforce this Agreement, (b) if required to do so by any law, court, or regulation, (c) to any governmental authority or self-regulatory entity having or asserting jurisdiction over it, (d) if its attorneys advise it that it has a legal obligation to do so or that failure to do so may result in it incurring a liability to any other Person, (e) to its professional advisors and auditors, (f) to its Affiliates, or (g) as set forth in the immediately succeeding sentence. The Participant may disclose the contents of this Agreement to any proposed transferee, assignee, subparticipant or other Person proposing to enter into contractual relations with the Participant in respect of the Participation or any part of it. The Participant agrees to comply with the requirements of the Credit Documents regarding confidentiality.

(e) Parties’ Other Relationships. Each Party and any of its affiliates may engage in any kind of lawful business or relationship with the Borrowers, any other Obligor or any of their respective affiliates without liability to the other Party or any obligation to disclose such business or relationship to the other Party.

(f) Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Agreement by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Agreement.

(g) Relationship Between the Seller and the Participant. The relationship between the Seller and the Participant shall be that of seller and buyer. Neither Party is a trustee or agent for the other Party, nor does either Party have fiduciary obligations to the other Party. This Agreement shall not be construed to create a partnership or joint venture between the Parties.

(h) Severability. The illegality, invalidity, or unenforceability of any provision of this Agreement under the law of any jurisdiction shall not affect its legality, validity or enforceability under the law of any other jurisdiction nor the legality, validity or enforceability of any other provision.

(i) Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of New York.

(j) Waiver of Trial by Jury. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT THEY MAY HAVE TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION, OR IN ANY LEGAL PROCEEDING DIRECTLY OR

INDIRECTLY BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS CLAUSE (J).

(k) Jurisdiction. Each Party irrevocably and unconditionally submits to and accepts the nonexclusive jurisdiction of any New York State or United States Federal court sitting in New York County for any action, suit, or proceeding arising out of or based upon this Agreement or any matter relating to it, and waives any objection that it may have to the laying of venue in any such court or that such court is an inconvenient forum or does not have personal jurisdiction over it. The Parties irrevocably agree that, should either Party institute any legal action or proceeding in any jurisdiction (whether for an injunction, specific performance, damages or otherwise) in relation to this Agreement, no immunity (to the extent that it may at any time exist, whether on the grounds of sovereignty or otherwise) from such action or proceeding shall be claimed by it or on its behalf, any such immunity being hereby irrevocably waived, and each Party irrevocably agrees that it and its assets are, and shall be, subject to such legal action or proceeding in respect of its obligations under this Agreement.

(l) Subrogation. To the extent that the Participant enforces any claim for indemnification or other claim or remedy against the Seller under this Agreement and receives payment or another remedy from the Seller in respect of such claim or remedy, the Parties agree that to the extent permitted by law and the Credit Documents, without the need for further action on the part of either Party, the Seller shall be subrogated to the rights of the Participant against any other Person with respect to such claim or remedy to the extent of such payment or other remedy.

(m) Expenses. Each Party agrees to bear its own expenses in connection with this Agreement.

(n) Interest. If either Party fails to pay any amount (including interest, to the fullest extent permitted by applicable law) payable by it hereunder when due, then interest shall accrue and be payable immediately upon demand on such unpaid amount at a per annum rate equal to the Federal Funds Rate from and including the date on which such amount became due to but excluding the date the same is paid in full.

(o) Notices. All communications between the Parties or notices or other information sent under this Agreement shall be in writing, hand delivered or sent by overnight courier or telecopier, addressed to the relevant Party at its address or facsimile number specified in Schedule 1 or at such other address or facsimile number as such Party may request in writing. All such communications and notices shall be effective upon receipt.

(p) Documents. The Seller shall furnish to the Participant copies of the Credit Documents and, as and when available to the Seller (without prejudice to Section 8(d)), a copy of each amendment, consent or waiver in connection with the Credit Documents. The Participant agrees that it shall maintain the confidentiality of any such documents to the extent required in the Credit Documents and to the same extent as if it were a party to the Credit Documents and shall, upon the Seller’s request, provide to the Seller a confidentiality undertaking to such effect in accordance with the terms of the Credit Documents prior to the delivery thereof.

[Signatures Begin on Next Page]

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered as of the date first above stated.


		SELLER

		LJH, LTD.

		By DLH Management, LLC, its general partner

		By:
		Lacy Harber, President

		PARTICIPANT OWL CREEK ASSET MANAGEMENT, LP

		By:
		Name:

		Title:

SCHEDULE 1

CREDIT AGREEMENT

“Borrowers” means the collective reference to Aircraft Interior Design, Inc., a Florida corporation, Brice Manufacturing Company, Inc., a California corporation, TIMCO Aviation Services, Inc., a Delaware corporation, TIMCO Engine Center, Inc., a Delaware corporation, TIMCO Engineered Systems, Inc., a Delaware corporation, and Triad International Maintenance Corporation, a Delaware corporation.

“Credit Agreement” means the Amended and Restated Financing Agreement dated as of April 8, 2005, among LJH, Ltd. (as the assignee of Fortress Credit Opportunities I LP, which was the assignee of Monroe Capital Advisors LLC), as lender, the Borrowers, and the Guarantors named therein, as amended, restated, supplemented or otherwise modified from time to time.

“Term C Loan” means a term loan in the principal amount of $6,000,000 to be funded after the Closing Date pursuant to the Credit Agreement.

“TIMCO” means TIMCO Aviation Services, Inc., a Delaware corporation.

“The Loans” means the Term Loan A-1 in the outstanding principal amount of $8,158,314.57 and the Term Loan A-2 in the original principal amount of $7,138,507.47.

“Specified Commitments” means, at any time, (a) the commitment to fund the Term Loan B Line in the principal amount of $3,000,000, and (b) the commitment to fund the Term Loan C in the principal amount of $6,000,000, in each case as specified in the Credit Agreement.

SCHEDULE 2

THE PARTICIPATION

“Closing Date” means April 10, 2006.

“Participant’s Account” means the account of Owl Creek Asset Management, L.P. at Morgan Stanley in New York.

“Participant’s Percentage” means 19.48%.

“Purchase Price” of the Loans means $3,567,422.09

“Seller’s Account” means the account of LJH, Ltd. at The American Bank of Texas, Sherman, Texas.

Participant’s Address for Notices and Delivery

Owl Creek Asset Management, L.P.
640 Fifth Avenue, 20^th Floor
New York, New York 10022
Attention: Mr. Daniel Sapadin
Facsimile: (212) 753-2760

Seller’s Address for Notices and Delivery

LJH, Ltd.
377 Neva Lane
Denison, Texas 75020
Attention: Mr. Lacy Harber
Facsimile: (903) 465-6514

EX-99.5 6 d34971exv99w5.htm RATIFICATION AGREEMENT exv99w5

Exhibit 99.5

EXECUTION COPY

RATIFICATION AGREEMENT

RATIFICATION AGREEMENT, dated as of April 10, 2006 (this “Agreement”), among LJH, LTD., a Texas limited partnership, with offices located at 377 Neva Lane, Denison, Texas 75020 (together with its successors and assigns, the “Lender”), AIRCRAFT INTERIOR DESIGN, INC., a Florida corporation (“AID”), BRICE MANUFACTURING COMPANY, INC., a California corporation (“Brice”), TIMCO AVIATION SERVICES, INC., a Delaware corporation (“Parent”), TIMCO ENGINE CENTER, INC., a Delaware corporation (“Engine”), TIMCO ENGINEERED SYSTEMS, INC., a Delaware corporation (“Engineered Systems”), and TRIAD INTERNATIONAL MAINTENANCE CORPORATION, a Delaware corporation (“TIMCO”; AID, Brice, Parent, Engine, Engineered Systems and TIMCO each individually being referred to herein as a “Borrower” and collectively as the “Borrowers”, AVIATION SALES DISTRIBUTION SERVICES COMPANY, a Delaware corporation (“Distribution Services”), AVIATION SALES LEASING COMPANY, a Delaware corporation (“Leasing”), AVIATION SALES PROPERTY MANAGEMENT CORP., a Delaware corporation (“Property Management”), AVS/CAI, INC., a Florida corporation (“AVS/CAI”), AVS/M-1, INC., a Delaware corporation (“AVS/M-1”), AVS/M-2, INC., a Delaware corporation (“AVS/M-2”), AVS/M-3, INC., an Arizona corporation (“AVS/M-3”), AVSRE, L.P., a Delaware limited partnership (“AVSRE”), HYDROSCIENCE, INC., a Texas corporation (“Hydroscience”), TMAS/ASI, INC., an Arkansas corporation (“TMAS/ASI”), and WHITEHALL CORPORATION, a Delaware corporation (“Whitehall”; Distribution Services, Leasing, Property Management, AVS/CAI, AVS/M-1, AVS/M-2, AVS/M-3, AVSRE, Hydroscience, TMAS/ASI and Whitehall each being individually referred to herein as a “Guarantor” and collectively as the “Guarantors”; the Borrowers and the Guarantors each being individually referred to herein as a “Company” and collectively as the “Company”).

W I T N E S S E T H:

WHEREAS, pursuant to the Amended and Restated Financing Agreement, dated as of April 8, 2005, among Monroe Capital Advisors, LLC (“Monroe”) and the Companies, Monroe made certain Term Loans (as defined in the Financing Agreement referred to below) to the Borrowers (such Financing Agreement, as amended and in effect on the date hereof, the “Financing Agreement”);

WHEREAS, pursuant to the Assignment and Acceptance (the “Assignment and Acceptance”) dated as of April 10, 2006, among Monroe, Fortress Credit Opportunities I LP (“Fortress”) and Monroe Investments, Inc., as assignors (collectively, the “Assignors”), and the Lender, as assignee, the Assignors have sold, transferred and assigned to the Lender, and the Lender has purchased, assumed and accepted from the Assignors, all of the Assignors’ rights, interests and obligations in and under the Loan Documents (as defined in the Financing Agreement) including all of the Term Loans;

WHEREAS, the Lender has been expending significant efforts and funds to assist the Companies in an attempt to resolve existing defaults under the Financing Agreement and the CIT Financing Agreement (as defined in the Financing Agreement); and

WHEREAS, the Companies will derive substantial direct and indirect benefit from the Assignment and Acceptance, the Transaction Agreement dated on April 10, 2006, among the Lender, Owl Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas Fund, Ltd., Owl Creek Overseas Fund II, Ltd. and TAS Holding Inc., and the transactions contemplated thereby.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:


SECTION 1.		Defined Terms. Capitalized terms used herein and defined in the Financing Agreement or in this Agreement shall have the meanings given to such terms in the Financing Agreement or in this Agreement, as applicable.

SECTION 2.		Ratification of Obligations Under the Loan Documents. Each of the Companies hereby (a) acknowledges and agrees that, immediately prior to the effective date of the Assignment and Acceptance (the “Assignment Effective Date”), (i) the outstanding principal amount of the Term Loan A-1 is $8,158,314.57 and the aggregate amount of accrued and unpaid cash interest and PIK interest on the Term Loan A-1 at the pre-default rate is $31,979.75, (ii) the outstanding principal amount of the Term Loan A-2 is $7,138,507.47 and the aggregate amount of accrued and unpaid cash interest and PIK interest on the Term Loan A-2 at the pre-default rate is $27,982.20, and (iii) the outstanding principal amount of the Term Loan B is $2,627,508.00 and the aggregate amount of accrued and unpaid cash interest and PIK interest on the Term Loan B at the pre-default rate is $9,496.71; (c) the aggregate outstanding default interest on the Term Loans is $319,466.38; and (d) acknowledges and agrees that upon the occurrence of the Assignment Effective Date, the Lender shall be the sole “Lender” under the Financing Agreement and the other Loan Documents in all respects and for all purposes, and the Obligations shall be due and payable to the Lender as provided in the Loan Documents without any offset, deduction, defense, recoupment or counterclaim.

2.1		Ratification of Liens Under the Loan Documents. Each Company hereby (a) acknowledges, confirms, ratifies and reaffirms all of the security interests and liens created under the Loan Documents in effect on the date hereof to which it is a party; (b) represents and warrants and covenants and agrees that all of such security interests and liens constitute valid, enforceable, perfected, security interests and liens in and to the Collateral in favor of the Lender with the priority required by the Loan Documents, and (c) authorizes the Lender to create (or cause to be created) and file (or cause to be filed) or record (or cause to be recorded), in each case at such Company’s sole cost and expense, any and all UCC-3 amendments, UCC-3 assignments, and UCC-1 financing statements in any jurisdiction to further perfect, protect and preserve the security interests and liens created under the Collateral Documents in favor of the Lender.

2.2		Reaffirmation of Obligations. Each Company hereby ratifies and reaffirms all of its obligations under the Loan Documents and agrees that each of the Loan


		Documents to which it is a party is and shall be enforceable against such Company by the Lender in accordance with its terms.

2.3		No Set-Off, Etc. Each Company hereby acknowledges and agrees that there is no basis nor set of facts on which any amount (or any portion thereof) owed by such Company under any Loan Document could be reduced, offset, waived, or forgiven, by rescission or otherwise; nor is there any claim, counterclaim, offset, recoupment, or defense (or other right, remedy, or basis having a similar effect) available to such Company with regard thereto; nor is there any basis on which the terms and conditions of any of the Obligations could be claimed to be other than as stated on the written instruments which evidence such Obligations.

2.4		Release of Claims. Each Company, by executing this Agreement, hereby acknowledges and agrees that none of the Companies has any offsets, defenses, claims, recoupments, causes of action (whether in tort, contract or otherwise) or counterclaims against the Lender or any of the Lender’s officers, directors, employees, attorneys, representatives, parents, affiliates, predecessors, successors, or assigns with respect to the Obligations or the Loan Documents, and that if such Company now has, or ever did have, any offsets, defenses, claims, recoupments, causes of action (whether in tort, contract or otherwise) or counterclaims against the Lender or any of the Lender’s officers, directors, employees, attorneys, representatives, parents, affiliates, predecessors, successors, or assigns, whether known or unknown, at law or in equity, from the beginning of the world through this date and through the time of execution of this Agreement which directly or indirectly arise from or relate to the Obligations or any of the Loan Documents or any of the transactions contemplated thereby (collectively, “Claims”), all such Claims are hereby irrevocably and unconditionally WAIVED, and each Company hereby irrevocably and unconditionally RELEASES the Lender and the Lender’s partners, officers, directors, employees, attorneys, representatives, parents, affiliates, predecessors, successors, and assigns from all such Claims and any liability therefor. Each Company covenants that it will not sue the Lender or any of the Lender’s officers, directors, employees, attorneys, representatives, parents, affiliates, predecessors, successors, or assigns with respect to any Claim released hereunder. Notwithstanding the foregoing, nothing contained in this Section 2.4 shall release any of the Companies from their rights of contribution among each other pursuant to Section 12.4 of the Financing Agreement.

2.5		Further Assurances. Each Company shall execute and deliver to the Lender all additional documents, instruments, and agreements that the Lender may require in order to create, perfect or establish the priority of any Liens created under the Collateral Documents and the Collateral granted therein and to otherwise give effect to the terms and conditions of this Agreement and the Assignment and Acceptance.


SECTION 3.		Miscellaneous.

3.1		Costs and Expenses. The Companies shall pay on demand all costs and expenses of the Lender, including without limitation, reasonable attorneys’ fees, incurred by the Lender in connection with this Agreement, the Assignment and Acceptance or any of the transactions contemplated hereby or thereby.

3.2		Interpretation. In connection with the interpretation of this Agreement and all other documents, instruments, and agreements incidental hereto:

	(a)		The captions of this Agreement are for purposes of convenience only, and shall not be used in construing the intent of the Lender and the Companies under this Agreement.

	(b)		Nothing contained in this Agreement shall constitute a waiver of any Event of Default or Default under the Financing Agreement or any of the other Loan Documents, whether now existing or hereafter arising, or a waiver of any of the Lender’s rights or remedies under any of the Loan Documents.


3.3		Binding Agreement. This Agreement shall be binding upon the Companies and their respective successors and assigns, and shall inure to the benefit of the Lender and the Lender’s successors and assigns.
3.4		Counterparts. This Agreement may be executed in separate counterparts (including counterparts delivered by facsimile or e-mail), each of which when so executed and delivered shall be an original, and both of which together shall constitute one instrument.
3.5		Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of North Carolina.

[remainder of page left intentionally blank]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written.


COMPANIES: AIRCRAFT INTERIOR DESIGN, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


BRICE MANUFACTURING COMPANY, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


TIMCO AVIATION SERVICES, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


TIMCO ENGINE CENTER, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


TIMCO ENGINEERED SYSTEMS, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


TRIAD INTERNATIONAL MAINTENANCE CORPORATION
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


AVIATION SALES DISTRIBUTION SERVICES COMPANY
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


AVIATION SALES LEASING COMPANY
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


AVIATION SALES PROPERTY MANAGEMENT CORP.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


AVS/CAI, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


AVS/M-1, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


AVS/M-2, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


AVS/M-3, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


AVSRE, L.P.
By:	Aviation Sales Property Management Corp., its general partner

	By:
		Name: Kevin Carter
		Title: Senior Vice President-Finance


HYDROSCIENCE, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


TMAS/ASI, INC.
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


WHITEHALL CORPORATION
By:
	Name:	Kevin Carter
	Title:	Senior Vice President-Finance


	LENDER: LJH, LTD.
	By:	DLH Management, L.L.C., its general partner

		By:
		Lacy Harber, President

EX-99.6 7 d34971exv99w6.htm STOCKHOLDERS AGREEMENT exv99w6

Exhibit 99.6

EXECUTION COPY

STOCKHOLDERS’ AGREEMENT

by and among

TAS HOLDING, INC.

and

THE STOCKHOLDERS NAMED HEREIN

Dated as of April 10, 2006

TABLE OF CONTENTS


		Page
1.	DEFINITIONS		1

2.	REPRESENTATIONS OF STOCKHOLDERS		8

2.1	AUTHORIZATION		8

2.2	COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS		8

2.3	CONSENTS		8

2.4	INVESTMENT		8

3.	TRANSFER OF SHARES		9

3.1	GENERAL RESTRICTION; PERMITTED TRANSFERS		9

3.2	NOTICE PRIOR TO SALE		10

3.3	TAG ALONG RIGHTS		11

3.4	BRING-ALONG RIGHT		12

3.5	COSTS		13

3.6	CLOSINGS		14

3.7	PURCHASE UPON EXERCISE OF REGISTRATION RIGHTS		14

4.	ALL TRANSFERS IN COMPLIANCE WITH LAW AND SUBJECT TO THIS AGREEMENT; SUBSTITUTION OF TRANSFEREE		15

4.1	VIOLATION OF TRANSFER PROVISIONS		15

4.2	COMPLIANCE WITH LAW; SUBSTITUTION OF TRANSFEREE		15

5.	ISSUANCES OF CAPITAL STOCK BY THE COMPANY; PREEMPTIVE RIGHT		15

5.1	PREEMPTIVE RIGHT		15

5.2	CLOSING OF NEW ISSUANCE		16

6.	GOVERNANCE		16

6.1	BOARD COMPOSITION; CORPORATE ACTION		16

- i -


		Page
6.2	TERMINATION OF SECTION 6.1		18

6.3	IRREVOCABLE PROXY		19

6.4	LIABILITY INSURANCE		19

7.	STOCK CERTIFICATE LEGEND		19

8.	MANAGEMENT STOCKHOLDERS		19

8.1	CALL BY THE COMPANY TO THE MANAGEMENT STOCKHOLDERS		20

8.2	PROHIBITED PURCHASES		20

8.3	CLOSING; PAYMENT		21

8.4	MANAGEMENT SALES NOT SUBJECT TO SECTION 3.2 PROCEDURES; TRANSFERS BY MANAGEMENT STOCKHOLDERS TO PERMITTED TRANSFEREES		21

9.	MISCELLANEOUS		22

9.1	ADDITIONAL PARTIES		22

9.2	NOTICES		22

9.3	NO THIRD-PARTY BENEFICIARIES		22

9.4	REFERENCES TO THIS AGREEMENT; HEADINGS; SCOPE		22

9.5	VALIDITY OF AGREEMENT; SEVERABILITY		23

9.6	FURTHER ACTION		23

9.7	GOVERNING LAW		23

9.8	COUNTERPART EXECUTION		23

9.9	NO IMPLIED WAIVER		23

9.10	JURISDICTION		23

9.11	AMENDMENTS		24

9.12	SUCCESSORS AND ASSIGNS		24

9.13	ENTIRE AGREEMENT		24

- ii -


		Page
9.14	ESCROW		24

10.	TERMINATION		24

10.1	TERMINATION AS TO STOCKHOLDER		24

10.2	TERMINATION OF AGREEMENT		24

- iii -

STOCKHOLDERS’ AGREEMENT (the “Agreement”), dated as of April 10, 2006, by and among TAS Holding, Inc., a Delaware corporation (the “Company”), and the Stockholders specified on the signature pages to this Agreement.

W I T N E S S E T H :

WHEREAS, each of the Stockholders is concurrently entering into a Transaction Agreement with the Company, dated as of the date hereof (the “Transaction Agreement”);

WHEREAS, pursuant to the terms and subject to the conditions set forth in each of the Transaction Agreement, the Stockholders will, among other things, purchase shares of Common Stock (as hereinafter defined);

WHEREAS, it is a condition to the parties entering into the Transaction Agreement that this Agreement be executed to restrict the transfer of the Shares (as hereinafter defined) and to provide for certain other rights and obligations as set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings:

“Affiliate” shall mean, as to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such Person. For the purposes of this definition, “control,” when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. The term “controlling” and “controlled” shall have meanings correlative to the foregoing.

“Board of Directors” shall mean the Board of Directors of the Company.

“Capitalized Lease” means, with respect to any Person, any lease of real or personal property by such Person as lessee which is (i) required under GAAP to be capitalized on the balance sheet of such Person or (ii) a transaction of a type commonly known as a “synthetic lease” (i.e. a lease transaction that is treated as an operating lease for accounting purposes but with respect to which payments of rent are intended to be treated as payments of principal and interest on a loan for Federal income tax purposes).

“Capitalized Lease Obligations” means, with respect to any Person, obligations of such Person and its Subsidiaries under Capitalized Leases, and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP.

“Capital Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not

- 1 -

voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.

“Carrying Value” shall mean, with respect to a Share, the price paid by the selling Management Stockholder for any such Share, less the amount of dividends paid to such Management Stockholder in respect of such Share.

“Cause” shall mean (i) in the case of a Stockholder with a written employment agreement with the Company or any of its Subsidiaries in which ‘Cause’ is defined, as defined in such agreement and (ii) in all other cases, a termination of such Stockholder’s employment by the Company or any of its Subsidiaries due to (A) the refusal or neglect of the Stockholder to perform his employment-related duties, (B) the Stockholder’s personal dishonesty, incompetence, willful misconduct or breach of fiduciary duty, (C) the Stockholder’s conviction of or entering a plea of guilty or nolo contendere to a crime constituting a felony or his or her willful violation of any law, rule, or regulation (other than a traffic violation or similar offense or violation outside of the course of employment which in no way adversely affects the Company or its reputation or the ability of the Stockholder to perform his employment-related duties or to represent the Company), or (D) the breach by the Stockholder of any written covenant or agreement with the Company or any of its Subsidiaries not to disclose any information pertaining to the Company or such subsidiary or not to compete or interfere with the Company or such subsidiary.

“Common Stock” shall mean the common stock of the Company, $0.01 par value per share.

“Common Stock Equivalents” shall mean (i) any evidences of Indebtedness, shares of stock or other securities directly or indirectly convertible into or exchangeable for shares of any class of Common Stock, and (ii) any right, option or warrant to subscribe for, purchase or otherwise acquire, directly or indirectly, shares of any class of Common Stock; provided, that unless otherwise specified herein, for the purposes of computing the number of Shares either outstanding or held by a Stockholder, the Common Stock Equivalents outstanding or held by such Stockholder shall be deemed to be converted, exercised or exchanged for shares of Common Stock, whether or not such conversion, exercise or exchange has actually been effected, but only to the extent then convertible, exercisable or exchangeable and vested.

“Company” shall have the meaning set forth in the preamble. Notwithstanding anything in this Agreement to the contrary, the term “Company” shall mean, without limitation, any successor corporation into which the Company is merged.

“Contingent Obligation” means, with respect to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, (i) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (ii) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement or (iii) any obligation of such Person, whether or not contingent, (A) to purchase any such primary obligation or any property

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constituting direct or indirect security therefor, (B) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (3) to purchase property, assets, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (4) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term “Contingent Obligation” shall not include any product or service warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Person is required to perform thereunder), as determined by such Person in good faith.

“Disability” shall mean if, as a result of such Stockholder’s incapacity due to reasonably documented physical or mental illness, such Stockholder shall have been unable for more than six months within any 12-month period to perform his or her duties with the Company or such subsidiary on a full-time basis.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, and regulations thereunder, in each case, as in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections.

“ERISA Affiliate” means, with respect to any Person, any trade or business (whether or not incorporated) which is a member of a group of which such Person is a member and which would be deemed to be a “controlled group” within the meaning of Sections 414(b), (c), (m) and (o) of the Internal Revenue Code.

“Fair Market Value” of the Shares shall mean, on any day, with respect to Shares which are (a) listed on a United States securities exchange, the last sales price of such stock on such day on the largest United States securities exchange on which such stock shall have traded on such day, or if such day is not a day on which a United States securities exchange is open for trading, on the immediately preceding day on which such securities exchange was open, (b) not listed on a United States securities exchange but is included in The NASDAQ Stock Market System (including the NASDAQ National Market), the last sales price on such system of such stock on such day, or if such day is not a trading day, on the immediately preceding trading day, or (c) neither listed on a United States securities exchange nor included in The NASDAQ Stock Market System, the fair market value thereof (as of a date which is not more than 20 days prior to the date as of which the determination is to be made) determined in good faith jointly by the Company and the Transferring Stockholder (except that, (i) in the case of an Involuntary Transfer (A) which is to an Affiliate of the Principal Stockholder, such determination shall be made jointly by the Company, the Involuntary Transferee and the Minority Stockholder or (B) which is not to an Affiliate of the Principal Stockholder, such determination shall be made jointly by the Company and the Involuntary Transferee and (ii) in the case of a transfer pursuant to

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Section 3.7, such determination shall be made by the Principal Stockholder and the Minority Stockholder)); provided, however, (A) that if, solely with respect to clause (i) above, such parties are unable to reach agreement within a reasonable period of time, the Fair Market Value shall be determined in good faith by an Independent Appraiser selected jointly by the Company and the Transferring Stockholder (or Involuntary Transferee and the Minority Stockholder, if applicable) or, if that selection cannot be made within 10 days, by an Independent Appraiser selected by the American Arbitration Association in accordance with its rules, which determination shall be conclusive and binding on the parties and (B) that if, solely with respect to clause (ii) above, such parties are unable to reach agreement within the 10 day time period prescribed by Section 3.7, then, subject to the provisions of Section 3.7, the Principal Stockholder and the Minority Stockholder shall (i) no later than 5 days after the expiration of such 10 day period set forth above, engage an Independent Bank regarding a Sale of the Company and (ii) confer for a period of no more than 30 days after the expiration of such 10 day period set forth above regarding plans or proposals for a Sale of the Company, including without limitation the solicitation of offers with respect to a Sale of the Company by third parties who are not Affiliates or Permitted Transferees of the Minority Stockholder, the Principal Stockholder or the Company, as applicable and the Fair Market Value shall be deemed to be the highest bona fide cash price per share offered during such 30 day period by such third parties. Fair Market Value, as determined pursuant to this Agreement, shall be based upon all considerations that the Independent Appraiser determines to be relevant, including the results of operations of the Company and any previous internal or third party appraisals of the fair market value of the Shares. All determinations of Fair Market Value under this Agreement shall be made by determining the Fair Market Value of the total equity of the Company and apportioning that value among the Shares subject to the determination without taking into consideration any premium for control, discount for minority interests, restrictions on transfer or the voting rights of the Shares subject to the determination but, in the case of any Common Stock Equivalent, taking into account any exercise price or purchase price thereof and any limitations on its exercisability.

“Family Member” shall have the meaning assigned to such term in Section 3.1(b).

“GAAP” means generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis.

“Good Reason” shall mean (i) in the case of a Stockholder with a written employment agreement with the Company or any of its Subsidiaries in which ‘Good Reason’ is defined, as defined in such agreement and (ii) in all other cases, if such Stockholder voluntarily terminates his or her employment with the Company or any of its Subsidiaries as a result of a significant reduction by the Company or such subsidiary of such Stockholder’s current salary, bonus or any agreed upon benefit provided under any employment agreement between the Company and such Stockholder without his or her prior written consent, other than any such reduction which is part of a general salary reduction or other concessionary arrangement affecting all employees or affecting the group of employees of which such Stockholder is a member (after receipt by the Company of written notice and a 20-day cure period).

“Hedging Agreement” means any interest rate, foreign currency, commodity or equity swap, collar, cap, floor or forward rate agreement, or other agreement or arrangement designed to protect against fluctuations in interest rates or currency, commodity or equity values

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(including, without limitation, any option with respect to any of the foregoing and any combination of the foregoing agreements or arrangements), and any confirmation executed in connection with any such agreement or arrangement.

“Indebtedness” means, with respect to any Person, without duplication, (i) all indebtedness of such Person for borrowed money; (ii) all obligations of such Person for the deferred purchase price of property or services (other than trade payables or other accounts payable incurred in the ordinary course of such Person’s business and not outstanding for more than 90 days after the date such payable was created); (iii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or upon which interest payments are customarily made; (iv) all reimbursement, payment or other obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder may be limited to repossession or sale of such property; (v) all Capitalized Lease Obligations of such Person; (vi) all obligations and liabilities, contingent or otherwise, of such Person, in respect of letters of credit, acceptances and similar facilities; (vii) all obligations and liabilities of such Person under Hedging Agreements; (viii) all Contingent Obligations; (ix) liabilities incurred under Title IV of ERISA with respect to any plan (other than a Multiemployer Plan) covered by Title IV of ERISA and maintained for employees of such Person or any of its ERISA Affiliates; (x) withdrawal liability incurred under ERISA by such Person or any of its ERISA Affiliates with respect to any Multiemployer Plan; and (xi) all obligations referred to in clauses (i) through (x) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. The Indebtedness of any Person shall include the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer.

“Independent” means a Person (i) who does not accept any consulting, advisory, or other compensatory fee from the Company, the Principal Stockholder, the Minority Stockholder or any of their Affiliates (other than customary renumeration paid to such Person as a director of the Company); and (ii) who is not an Affiliate or affiliated person of the Company, the Principal Stockholder or the Minority Stockholder.

“Independent Appraiser” means a third party appraiser which (i) does not have a current material business or other relationship with the Company, any Stockholders of the Company or any of their respective Affiliates and (ii) is a nationally recognized investment banking or accounting firm or an Affiliate of such a firm.

“Independent Bank” means a nationally recognized investment banking an Affiliate of such a firm which does not have a current material business or other relationship with the Company, any Stockholders of the Company or any of their respective Affiliates..

“Inventory” means, with respect to any Person, all goods and merchandise of such Person, including, without limitation, all raw materials, work-in-process, packaging, supplies, materials and finished goods of every nature used or usable in connection with the shipping, storing, advertising or sale of such goods and merchandise, whether now owned or hereafter

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acquired, and all such other property the sale or other disposition of which would give rise to an account receivable or cash.

“Involuntary Transfer” shall mean any transfer, proceeding or action by or in which a Stockholder shall be deprived or divested of any right, title or interest in or to any of the Shares otherwise than by a voluntary decision on the part of such Stockholder, including any seizure under levy of attachment or execution, any transfer in connection with bankruptcy (whether pursuant to the filing of a voluntary or an involuntary petition under the United States Bankruptcy Code of 1978, or any modifications or revisions thereto) or other court proceeding to a debtor in possession, trustee in bankruptcy or receiver or other officer or agency, any transfer to a state or to a public officer or agency pursuant to any statute pertaining to escheat or abandoned property and any transfer pursuant to a divorce or separation agreement or a final decree of a court in a divorce action from which there is no further right of appeal; provided, however, that the term “Involuntary Transfer” shall not include any transfer upon the death of a Stockholder who is a natural person to his or her executors, testamentary trustees, legatees, beneficiaries or legal representatives, or upon the incapacity of a Stockholder who is a natural person, to his or her conservators or guardians.

“IPO” shall mean the first firm commitment underwritten public offering of Common Stock of the Company which is registered under the Securities Act.

“Lien” means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any Capitalized Lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.

“Management Stockholders” shall mean any Stockholder who is or becomes a member of the Company’s management or otherwise employed by the Company and their Permitted Transferees.

“Merger” means the merger of the Company with and into TIMCO Aviation Services, Inc. (“Timco”) pursuant to the Merger Agreement.

“Minority Stockholder” shall mean collectively, the parties listed on Annex A hereto, as amended from time to time.

“Other Stockholders” shall have the meaning assigned to such term in Section 3.2(a).

“Permitted Transferee” shall have the meaning assigned to such term in Section 3.1(b).

“Person” shall mean any individual, firm, partnership, corporation, trust, joint venture, association, joint stock company, limited liability company, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof, and shall include any successor (by merger or otherwise) of such entity.

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“Principal Stockholder” shall mean LJH, LTD.

“Registered Sale” shall mean a sale under an effective registration statement filed pursuant to the Securities Act.

“Registration Rights Agreement” shall mean the Registration Rights Agreement, dated as of the date hereof, and as amended from time to time, among the Company and the Stockholders party thereto.

“Retirement” shall mean the retirement of a Management Stockholder upon or after reaching the age of 65.

“Sale of the Company” shall mean the sale of the Company to a Person (or group) that is not an Affiliate or Permitted Transferee of any Stockholder, pursuant to which such Person (or group) shall acquire beneficial ownership of 50% or more of the Shares (whether by merger, consolidation or transfer of Shares) or 50% or more of the assets and properties of the Company; provided; that solely with respect to Section 3.7 hereof the term “Sale of the Company” shall be deemed to refer to the acquisition of all the assets or properties of the Company or 100% of the Shares, as applicable.

“Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder, or any successor statute.

“Shares” shall mean any shares of Common Stock and any Common Stock Equivalents held by any Stockholder as of the date of this Agreement (unless specifically stated otherwise) and any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution for the Shares, by reason of any stock dividend, split, reverse split, combination, recapitalization, reclassification, merger, consolidation or otherwise and all such shares subsequently acquired for value, as if held on the date hereof.

“Stockholders” shall mean, collectively, the parties listed on the signature pages to this Agreement and any transferee who has agreed to be bound by the terms and conditions of this Agreement in accordance with Section 4.

“Subsidiary” means, with respect to any Person at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity (i) the accounts of which would be consolidated with those of such Person in such Person’s consolidated financial statements if such financial statements were prepared in accordance with GAAP or (ii) of which more than 50% of (A) the outstanding Capital Stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such Person, (B) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (C) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such Person.

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“Tag Along Stockholder” shall have the meaning assigned to such term in Section 3.3(b).

“Transaction Agreement” shall have the meaning set forth in the preamble.

“transfer” shall have the meaning assigned to such term in Section 3.1(a).

“Transfer Costs” shall have the meaning assigned to such term in Section 3.5.

“Transferring Stockholder” shall have the meaning assigned to such term in Section 3.2(a).

REPRESENTATIONS OF STOCKHOLDERS.

Each of the Stockholders with respect to themselves represents and warrants as follows:

2.1 Authorization. Such Stockholder has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder and, if such Stockholder is an entity, this Agreement has been duly authorized, executed and delivered by such Stockholder. This Agreement is valid, binding and enforceable against such Stockholder in accordance with its terms, except that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and remedies of creditors.

2.2 Compliance with Laws and Other Instruments. The execution and delivery of this Agreement, and the performance of the obligations hereunder, will not (a) conflict with (i) for any Stockholder that is an entity, any provision of any governing instrument applicable to such Stockholder or (ii) any permit, franchise, judgment, decree, statute, rule or regulation applicable to such Stockholder or its business or property or (b) result in any material breach of any terms or provisions of, or constitute a material default under, any material contract, agreement or instrument to which such Stockholder is a party or by which it is bound or to which any assets of such party are subject.

2.3 Consents. No filing with, or consent, approval, authorization or action of, any governmental authority or third party, is required to be made or obtained by or with respect to such Stockholder in connection with the execution and delivery of this Agreement by it, other than such filings, consents, approvals, authorizations or actions, the failure of which to make or obtain, individually or in the aggregate, would not materially affect its obligations hereunder.

2.4 Investment. Each Stockholder acquiring Shares (i) is acquiring the Shares solely for such Stockholder’s own account for investment purposes, and not with a view to the distribution thereof, and will not sell or otherwise dispose of any Shares except in compliance with the Securities Act, the rules and regulations of the Securities and Exchange Commission (the “SEC”) thereunder and the terms of this Stockholders Agreement, (ii) has received certain information concerning the Company and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Shares, (iii) is able to bear the economic risk and lack of liquidity inherent in holding the Shares,

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including the complete loss of such Stockholder’s investment in the Shares, and (iv) is an accredited investor, as defined in the rules promulgated under the Securities Act and/or either alone or with such Stockholder’s purchaser representative(s) has such knowledge and experience in financial and business matters that such Stockholder is capable of evaluating the merits and risks of an investment in the Shares.

TRANSFER OF SHARES.

3.1 General Restriction; Permitted Transfers.

(a) General. No Stockholder shall, directly or indirectly, sell, give, assign, hypothecate, pledge, encumber, grant a security interest in or otherwise dispose of (whether by operation of law or otherwise) (each, a “transfer”) any Shares or any right, title or interest therein or thereto, except (i) as expressly permitted herein, or (ii) pursuant to a Registered Sale.

(b) Permitted Transfers. Any Stockholder may, subject to Section 4, transfer Shares to (i) with respect to a Stockholder who is a natural person, (A) a member of such Stockholder’s immediate family, which shall mean his or her spouse (except for a spouse with whom such Stockholder has entered into any divorce or separation agreement or action) and lineal descendants (whether natural or adopted) (each, a “Family Member”), (B) a trust, corporation, limited liability company or partnership, all of the beneficial interests in which shall be held by such Stockholder or one or more Family Members of such Stockholder, (C) in the case of such Stockholder’s incapacity, a guardian or conservator of such Stockholder, or (D) in the case of such Stockholder’s death, by will or by the laws of interstate succession, such Stockholder’s executors, administrators, testamentary trustees, legatees or beneficiaries; provided, however, that during the period any such trust, corporation, limited liability company or partnership provided for in subclause (B) above holds any right, title or interest in any Shares, no Person other than such Stockholder or one or more Family Members of such Stockholder may be or become beneficiaries, stockholders, members or limited or general partners thereof; and (ii) with respect to a Stockholder that is not a natural person, (A) an Affiliate of such Stockholder or (B) upon the liquidation or dissolution of such Stockholder, any general or limited partner, member or stockholder of such Stockholder (each Person referred to in the preceding clauses (i) and (ii) is herein referred to as a “Permitted Transferee”). Any transfer pursuant to this Section 3.1(b) may be effected without complying with the provisions of Section 3.2 or 3.3. Upon the consummation of, and as a condition to, any transfer pursuant to this Section 3.1(b), the transferee must execute an Instrument of Accession in the form of Exhibit A hereto and thereby become a party to, and be bound by, the terms and provisions of this Agreement. References in this Agreement to Shares held or owned by any Stockholder shall be deemed to include Shares held or owned by any such Permitted Transferee(s) and references to actions to be taken by a Stockholder shall be taken jointly by such Stockholder and its Permitted Transferee(s).

(c) Pledge or Grant of Security Interest by Stockholder. Subject to Section 4, a Stockholder may pledge all or a portion of its Shares or grant a security interest therein to secure indebtedness of such Stockholder or any of its Permitted Transferees owing to a bank, other financial institution or other financing source; provided, however, that (i) any foreclosure or transfer of title pursuant to such pledge of (or grant of a security interest in) Shares

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shall not be governed by this Section 3.1(c) but shall be deemed an Involuntary Transfer, and (ii) the pledge agreements or other related financing agreements of any Stockholder shall be subject to and acknowledge the rights of the Company and the other Stockholders set forth herein.

3.2 Notice Prior to Sale

(a) Information Notice. Except for a transfer permitted by Section 3.1(b) and subject to compliance with the provisions of Sections 3.3 and 4, prior to any transfer (other than in connection with a tender offer or exchange offer) of Shares by a Stockholder (a “Transferring Stockholder”), such Transferring Stockholder shall not approach any bona-fide buyer prior to informing the other Stockholders (the “Other Stockholders”), in writing (the “Information Notice”) of the Transferring Stockholders desire to seek a buyer and the expiration of ten (10) days from the date of said Information Notice. The Transferring Stockholder, through its representative, shall meet or confer with the Other Stockholders regarding its plans and proposals at reasonable times and places during the ten (10) days following the Information Notice (the “Information Period”).

(b) Permitted Transfers. Upon the expiration of the Information Period, subject to Section 3.3, the Transferring Stockholder may consummate a sale of Shares by entering within 120 days from the expiration of the Information Period into a definitive agreement with a third party. If any sale to a third party pursuant to this clause (b) is not consummated within 120 days of the date of execution of the applicable purchase agreement, the restrictions provided for herein shall again become effective, and no transfer of Shares may be made thereafter (other than in a transfer pursuant to Section 3.1) by the Transferring Stockholder without again notifying the Other Stockholders in accordance with this Section 3.2.

(i) Except for a transfer permitted by Section 3.1(b), if the Minority Stockholder or its Permitted Transferee desires to sell, dispose of, or otherwise transfer all or any of its Shares (the “Option Stock”) to any Person that is not an Affiliate or Permitted Transferee of the Minority Stockholder and who has made an unsolicited bona-fide offer to purchase such Option Stock (other than by means of a tender offer or exchange offer registered with the SEC) (the “Proposed Transferee”), then, before transferring any of the Option Stock to such Proposed Transferee, (i) it shall have received a bona fide written offer to purchase the Option Stock at a stated dollar price per share for cash, and (ii) it shall give written notice (the “Option Notice”) to the Principal Stockholder . The Option Notice shall:

	(A)		certify that the Minority Stockholder has received a bona fide written offer to purchase the Option Stock and enclose a copy of such offer,

	(B)		identify the Proposed Transferee who has made such bona fide offer,

	(C)		state the number of Shares the Proposed Transferee has offered to purchase,

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	(D)		state the purchase price per share for the Shares to be transferred and other material terms and conditions of the Transferor’s offer to purchase the Option Stock, and

	(E)		state the date on which the Option Notice is being sent to the Principal Stockholder (the “Notice Date”).

(ii) On or before the twentieth (20th) day after the Notice Date, the Principal Stockholder may exercise an option to purchase all but not less than all of the Option Stock for the same purchase price and on the same terms and conditions as the Proposed Transferee’s offer as set forth in the Option Notice. The Principal Stockholder shall exercise its option by giving written notice to the Minority Stockholder on or before the expiration of the twentieth (20^th) day after the Notice Date (the “Exercise Notice”). The aggregate purchase price specified in the Option Notice shall be paid solely in cash.

(iii) The closing for the purchase by the Principal Stockholder of the Option Stock under Section 3.2(c) shall be held at 10:00 a.m. at the principal office of the Company, on the date specified in the Exercise Notice (the “Closing Date”), which date shall be not earlier than 30 days nor later than 60 days after the date of the Exercise Notice. The purchase price and all other terms for such purchase of the Option Stock shall be as set forth in the Option Notice. At such closing, the Minority Stockholder shall deliver certificates representing the Option Stock, duly endorsed for transfer and accompanied by all requisite stock transfer taxes, if any, against payment of the purchase price therefore, and the Option Stock shall be free and clear of any liens, charges, claims or encumbrances (other than restrictions imposed pursuant to applicable Federal and state securities laws and restrictions imposed by this Agreement) and the Minority Stockholder shall so represent and warrant. The Minority Stockholder shall further represent and warrant that it is the record and beneficial owner of such Shares and make such additional representations and warranties as shall be customary in transactions of a similar nature.

(iv) If the Principal Stockholder does not elect to purchase all of the Option Stock set forth in the Option Notice, the Minority Stockholder may (subject to the terms of Section 4) transfer the Option Stock to the Proposed Transferee named in the Option Notice for the consideration no less than that stated in the Option Notice and substantially upon the terms set forth in the Option Notice. The transfer of the Option Stock to the Proposed Transferee must be consummated within a period of 120 days after the date of the Notice Date. Any transfer after the expiration of such 120-day period and any transfer to a different transferee or for different form of consideration or upon terms and conditions substantially different from those set forth in the Option Notice shall be null and void.

(v) Failure to Exercise Options. The failure of the Principal Stockholder to give any written notice specified in this Section 3.2(c) within the time period specified herein shall be deemed to be a waiver of its rights under this Section 3.2(c).

3.3 Tag Along Rights.

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(a) The Principal Stockholder may not and shall cause its Affiliates not to, transfer any Shares to one or more third parties if such transactions, together with all Shares previously transferred by the Principal Stockholders to one or more third parties, would, if consummated, result in the Principal Stockholder transferring more than 25% of the aggregate number of Shares held by the Principal Stockholder (without giving effect to any previous transfers pursuant to Section 3.1(b) or this Section 3.3), unless each Other Stockholder is offered a right to sell (the “Tag Along Right”) in such transfer with such Principal Stockholder. Any sale pursuant to this Section 3.3 shall be made in compliance with the provisions of Section 3.2.

(b) At least 20 days prior to any such transfer, such Principal Stockholder will deliver a sale notice to the Other Stockholders specifying the identity of the prospective transferee(s) and disclosing in reasonable detail the number of Shares, the price, which shall be payable solely in cash at the closing of the transaction or in installments over time, a good faith estimate of the Transfer Costs for such transfer and other terms and conditions of the proposed transfer, including, without limitation, the expected aggregate holdings (in terms of dollars and percentage) by the Principal Stockholder of the Shares immediately after consummation of such proposed transfer. The Stockholders who elect to participate in the proposed transfer (the “Tag Along Stockholders”) shall deliver written notice of their election to participate to the Principal Stockholder prior to the expiration of such 20-day period.

(c) Each Tag Along Stockholder will be entitled to sell in such proposed transfer, at the same price and on the same terms as the Principal Stockholder, a number of Shares equal to the product of (x) the quotient determined by dividing the number of Shares then held by such Tag Along Stockholder by the aggregate number of Shares held by the Principal Stockholder and all Tag Along Stockholders multiplied by (y) the number of Shares to be sold in such proposed transfer. The number of Shares proposed to be transferred by the Principal Stockholder in the current transfer shall be reduced to the extent necessary to provide for the sale of Shares by each Tag Along Stockholder exercising its rights hereunder.

(d) Permitted Transfer. The transferring Principal Stockholder and the Tag Along Stockholders may transfer the Shares at the price and on the terms and conditions set forth in the sale notice for a period of 60 days from the expiration of the 20-day period commencing on the date of delivery of the sale notice to the Other Stockholders. Any Shares not transferred within such period again shall be subject to the provisions of this Section 3.3 in connection with any subsequent transfer.

(e) Failure to Exercise Option. The failure of any Other Stockholder to give written notice as specified in this Section 3.3 within the time period specified herein shall be deemed to be a waiver of its rights under this Section 3.3.

3.4 Bring-Along Right

(a) Buyout Notice. In the event that one or more Stockholders who, together, beneficially own 50% or more of the Shares (collectively, the “Selling Stockholder”) shall have received a bona fide offer from a Person that is not an Affiliate or Permitted Transferee of the Selling Stockholder (or shall have entered into a bona fide written agreement with such Person) relating to a Sale of the Company, and the Selling Stockholder desires to

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effect, or cause the Company to effect, such Sale of the Company, the Selling Stockholder shall be entitled, after complying with the provisions of Section 3.2(a), to give a notice (a “Buyout Notice”) to the other Stockholders (the “Bring-Along Stockholders”), not less than 60 days prior to the closing of such Sale of the Company, stating that it proposes to effect (or cause the Company to effect) such transaction, specifying the name and address of the proposed parties to such transaction, the anticipated closing date, the consideration payable in connection therewith and the terms and conditions thereof, and attaching a copy of all writings between the Selling Stockholder (or the Company) and the other parties to such Sale of the Company transaction necessary to establish the terms of such transaction. A Stockholder shall not be required to comply with Section 3.3 with respect to a Sale of the Company pursuant to this Section 3.4

(b) Required Sale. Each Bring-Along Stockholder hereby appoints the Selling Stockholder and any of its successors and assigns attorney-in-fact and grants it an irrevocable proxy, coupled with an interest, to vote in respect of any Sale of the Company subject to this Section 3.4. The irrevocable proxy will be effective for all time and has no termination date. Each Bring-Along Stockholder hereby represents that any other proxies heretofore given in respect of its Shares are not irrevocable and are hereby revoked. Each Bring-Along Stockholder hereby approves, ratifies and confirms all actions that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. The irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the Delaware General Corporate Law. Each Bring-Along Stockholder agrees that, upon the giving of a Buyout Notice by the Selling Stockholder, it shall be obligated to transfer all Shares held by it in exchange for the per-share purchase price of the Sale of the Company transaction (and hereby waives any dissenters’ rights, appraisal rights or similar rights in connection with any merger or consolidation and agrees to take all necessary action to evidence such waiver and to cause the Company to consummate the proposed transaction, including executing such documents as may be reasonably required by the Selling Stockholder in connection with such sale); provided, that the Bring-Along Stockholders shall only be obligated as provided in this Section 3.4 if (i) the Selling Stockholder shall sell all of its Shares in, or vote all of its Shares in favor of, such Sale of the Company transaction, (ii) each Bring-Along Stockholder shall receive the same per Share consideration as the Principal Stockholder in the Sale of the Company transaction (in the case of any Common Stock Equivalent, as adjusted for any amounts payable upon exercise, conversion or exchange), and (iii) the consideration received by each Bring-Along Stockholder shall be in the form of cash, and (iv) no Bring-Along Stockholder shall be required to make any representation, covenant or warranty in connection with the Sale of the Company other than with respect to its beneficial and record ownership of, and authority to sell, its Shares, free and clear of any liens, claims, options, charges, encumbrances and rights (other than those arising hereunder); provided, each such Bring-Along Stockholder shall participate, pro rata, based upon the number of Shares being sold by the Selling Stockholder and each Bring-Along Stockholder, (A) in any indemnity liabilities to the purchaser in such transaction, and (B) in any escrow for the purpose of satisfying any such indemnity liabilities, and (v) each Bring-Along Stockholder is provided with a fairness opinion from an Independent Appraiser, stating that the per Share consideration is fair from a financial point of view.

3.5 Costs. All reasonable costs and expenses incurred by any Stockholder in connection with a transfer hereunder (other than a transfer in which (i) the Selling Stockholder shall have exercised its bring-along right under Section 3.4 or (ii) the Principal Stockholder shall

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have exercised its rights under Section 3.7), including all attorneys’ fees, costs and disbursements and any finders’ fees or brokerage commissions, and all fees and expenses of any third party incurred, pursuant to the terms hereof, in connection with a determination of Fair Market Value (collectively, “Transfer Costs”) shall be allocated pro rata among the Stockholders transferring Shares, with each bearing that portion of such costs and expenses equal to a fraction, the numerator of which shall be the amount of the gross proceeds received in such transfer by such Stockholder and the denominator of which shall be the total amount of the gross proceeds received by all Stockholders in such transfer. All reasonable costs and expenses incurred by the Stockholders in connection with a transfer in which the Selling Stockholder shall have exercised its bring-along right under Section 3.4 or in which the Principal Stockholder shall have exercised its right under Section 3.7, including fees, costs and disbursements of one counsel chosen by the Selling Stockholder or the Principal Stockholder, and any finders’ fees or brokerage commissions, shall be paid by the Selling Stockholder or the Principal Stockholder, in each case, as applicable.

3.6 Closings. At any closing for the purchase of Shares, each Stockholder selling Shares shall deliver certificates representing such Shares, duly endorsed with a signature guarantee for transfer and accompanied by all requisite transfer taxes, if any, and such Shares shall be free and clear of any liens, claims, options, charges, encumbrances or rights (other than those arising hereunder), and such selling Stockholder shall so represent and warrant, and each shall further represent that it is the beneficial and record owner of such Shares and has the authority to sell such Shares. At such closing, each purchaser of Shares shall deliver at such closing payment for the cash portion of the consideration for the Shares purchased by it by certified or official bank check or wire transfer and shall pay the balance in accordance with the agreed upon terms. At such closing, all of the parties shall execute such additional documents as are otherwise customary and appropriate.

3.7 Purchase Upon Exercise of Registration Rights. If the Minority Stockholder makes a Demand Registration (as defined in the Registration Rights Agreement) at any time prior to an IPO, then within ten (10) days of a Request (as defined in the Registration Rights Agreement), the Principal Stockholder may elect by delivering a written notice (“Section 3.7 Exercise Notice”) to the Minority Stockholder to purchase all but not less than all of such number of Shares as the Minority Stockholder proposes to be registered pursuant to the Request (the “Section 3.7 Stock”) for cash at Fair Market Value of the Shares being purchased by the Principal Stockholder. If within 10 days of the Request the Minority Stockholder and the Principal Stockholder do not agree on the Fair Market Value of the Section 3.7 Stock, in accordance with the definition of Fair Market Value, the Minority Stockholder and the Principal Stockholder shall meet and confer regarding plans and proposals for a Sale of the Company and the Fair Market Value shall be determined in accordance with such definition. Upon determination of the Fair Market Value of the Shares subject to a Sale of the Company (which shall be no later than the 40^th day after the Request), the Principal Stockholder shall (subject to its rights under Section 3.4), at the option of the Minority Stockholder purchase the Section 3.7 Stock at the Fair Market Value; provided, the Principal Stockholder may elect not to purchase the Section 3.7 Stock, provided, further that the Request shall be reinstated, the Minority Stockholder shall be entitled to its rights as an Initiating Holder (as such term is defined in the Registration Rights Agreement) and the Company shall comply with its obligations under the Registration Rights Agreement. The closing of a transfer contemplated by this Section 3.7 shall

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occur on or before 45 days from the date of the Request and in accordance with Sections 3.5 and 3.6 above and the closing of a sale of the Company contemplated by this Section 3.7, notwithstanding the provisions of Section 3.4 shall occur on or before 60 days from the date of the Request and in accordance with Sections 3.5 and 3.6 above . The failure of the Principal Stockholder to give any written notice specified in this Section 3.7 within the time period specified herein shall be deemed to be a waiver of its rights under this Section 3.7.

ALL TRANSFERS IN COMPLIANCE WITH LAW AND SUBJECT TO THIS AGREEMENT; SUBSTITUTION OF TRANSFEREE.

4.1 Violation of Transfer Provisions. Any purported transfer of any Shares by any Stockholder in violation of any provision of this Agreement shall be void and shall not transfer any interest in or title to the purported transferee. The Company shall not be required to (i) transfer on its books any Shares in connection with any transfer in violation of any of the provisions set forth in this Agreement, or (ii) treat as owner of such Shares or to accord the right to vote as such owner or to pay dividends to any transferee of such Shares in such transfer.

4.2 Compliance with Law; Substitution of Transferee. In addition to the other restrictions on transfer contained in this Agreement, the Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or pursuant to an exemption from such registration. Notwithstanding any other provision of this Agreement, no transfer may be made unless (i) each transferee of Shares (other than a transferee in a Registered Sale or in a transfer pursuant to Section 3.1(c) but including all transferees in transactions pursuant to Sections 3.1(b)) shall agree in writing to be bound by the terms and conditions of this Agreement pursuant to an Instrument of Accession in the form of Exhibit A hereto and shall cause his or her spouse, if any, to execute a Spousal Waiver in the form of Exhibit B attached hereto, if such transferee is a natural person who resides in a state with a community property system, and (ii) the transfer shall comply in all respects with the applicable provisions of this Agreement, and with applicable federal and state securities laws including the Securities Act, and the Company may require such information from the transferor as is necessary to permit the Company or its counsel to make a determination as to such compliance. Upon becoming a party to this Agreement, subject to Section 6.2, a transferee shall enjoy the same rights and be subject to the same obligations as its predecessor hereunder.

ISSUANCES OF CAPITAL STOCK BY THE COMPANY; PREEMPTIVE RIGHT

5.1 Preemptive Right. The Company shall give each Stockholder 30 days’ prior written notice of the proposed issuance or sale by the Company or any of its Subsidiaries of any Common Stock, any Common Stock Equivalent, preferred stock of the Company (or any other security exercisable for or convertible into any shares of any series of preferred stock), any equity or debt securities of any Subsidiary of the Company or any securities evidencing Indebtedness or other securities or equity or debt interest of the Company or any of its Subsidiaries (each, a “New Issuance”) other than Common Stock or Common Stock Equivalents issued or sold by the Company or any of its Subsidiaries (i) to the Company’s employees, independent contractors, strategic partners, consultants or directors pursuant to arrangements approved unanimously by the Board of Directors, (ii) in connection with acquisitions of other companies or businesses, (iii) as a stock split or stock dividend, (iv) pursuant to the exercise,

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conversion or exchange of any then outstanding Common Stock Equivalent, (v) pursuant to a public offering registered under the Securities Act, or (vi) in connection with a Sale of the Company. Such notice shall specify the number and class of securities to be issued, the rights, terms and privileges thereof, the price at which such securities shall be issued and the portion such Stockholder shall be entitled to purchase pursuant to this Section 5.1. Each Stockholder shall be entitled to purchase that portion of a New Issuance equal to a fraction, the numerator of which shall be the total number of Shares owned by such Stockholder, giving effect, without duplication, to all Common Stock Equivalents owned by such Stockholder, whether or not then convertible, exercisable or exchangeable, but only to the extent then vested, and the denominator of which shall be the total number of Shares then outstanding, giving effect, without duplication, to all Common Stock Equivalents outstanding, whether or not then convertible, exercisable or exchangeable, but only to the extent then vested (including such Stockholder’s Shares), at the most favorable price and on the most favorable terms as are offered to any other Persons, by giving written notice of such election to the Company within 15 days after notice of such New Issuance has been given to such Stockholder; provided, however, that no Stockholder shall have any right to purchase securities pursuant to this Section 5.1 if, prior to a sale of securities to such Stockholder pursuant to this Section, such securities would be required to be registered under the Securities Act. The failure of a Stockholder to give any written notice specified in this Section 5.1 within the time period specified herein shall be deemed to be a waiver of its rights under this Section 5.1.

5.2 Closing of New Issuance. Upon the expiration of the offering period described above, the Company shall be entitled to sell such securities which the Stockholders have not elected to purchase during the 120-day period following such expiration at a price and on terms and conditions no more favorable to the purchasers thereof than those offered to the Stockholders. Any such securities offered or sold by the Company after such 120-day period must be reoffered to the Stockholders pursuant to the terms of this Section. The closing of any purchase by the Stockholders pursuant to Section 5.1 shall be held at the time and place of the closing of, and on the same terms and conditions as, the New Issuance, or at such other time and place as the parties to the transaction may agree. At such closing, the participating Stockholders shall deliver, by certified or official bank check or wire transfer, so much of the purchase price for its portion of the New Issuance as is payable in cash and shall pay the balance in accordance with the agreed upon terms of the transaction, and all parties to the transaction shall execute such documents as are otherwise customary and appropriate.

6. GOVERNANCE.

6.1 Board Composition; Corporate Action.

(a) Board Composition. Each Stockholder shall vote all of the voting securities of the Company over which such Stockholder has voting control and shall take all other necessary or desirable actions within its control (whether in its capacity as a stockholder, director, member of a board committee or officer of the Company or otherwise, and including attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Company shall take all necessary or desirable actions within its control (including calling special board and stockholder meetings), so that during the term of this Agreement (subject to Section 6.2):

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(i) the authorized number of directors constituting the entire Board of Directors shall be five;

(ii) the following persons shall be elected to the Board of Directors at each election of directors:

	(A)		two individuals, in the aggregate, designated by the Principal Stockholder and any other transferee of the Principal Stockholder as provided in Section 6.2;

	(B)		one individual designated by the Minority Stockholder and any other transferee of the Minority Stockholder as provided in Section 6.2; and

	(C)		two individuals, who shall be (i) Independent and (ii) designated jointly (but not individually) by the directors designated under subclauses (A) and (B) above (the “Independent Directors”);

(iii) any member of the Board of Directors who shall be designated for removal from the Board of Directors by the Person(s) authorized to designate such member for election pursuant to clause (ii) of this Section 6.1(a) shall be removed from the Board of Directors;

(iv) each director of the Company who is appointed pursuant to Section 6.1(a)(ii) shall be entitled to representation on each committee, if any, of the Board of Directors at least proportionate to his or her representation on the Board of Directors, unless and except to the extent otherwise required by any applicable law or rule promulgated by the SEC or stock exchange on which the securities of the Company are listed;

(v) each of the Principal Stockholder and the Minority Stockholder shall be entitled to appoint one director (each which director shall be a then current member of the Board of Directors) to each board of directors of each Subsidiary of the Company (or equivalent governing body); provided that at the election of the Minority Stockholder or the Principal Stockholder the composition of each board of directors of any Subsidiary of the Company may be established in accordance with Section 6.1(a)(ii); and

(vi) any vacancy on the Board of Directors created by reason of the death, removal or resignation of a member shall be filled by an individual designated by the Person(s) authorized to designate such member for election pursuant to clause (ii) of this Section 6.1(a).

(b) Corporate Action. The Company shall not, directly or indirectly, without the affirmative vote or written consent of the Minority Stockholder:

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(i) enter into, renew, extend or be a party to, or permit any of its Subsidiaries to enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with, or make any loan or advance to, or purchase, assume or guarantee any Indebtedness to or from, any of its Affiliates or stockholders (or any Affiliate of any stockholder) or any Person in which an Affiliate of the Company or any of its Subsidiaries (other than a Subsidiary of the Company) has an interest as a director, officer, employee or greater than 5% stockholder or interest through a relationship with a Family Member or any Person related by marriage to a Family Member, except (1) necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate thereof, but in no event for consideration in excess of $1,000,000 per annum, in one or a related series of transaction (2) transactions with another wholly-owned Subsidiary of the Company or the Company and (3) transactions in existence as of the date hereof;

(ii) amend, alter, change, repeal or waive any provision of its or any of its Subsidiaries Certificate of Incorporation or its By-laws (or applicable governing documents) in any manner (whether by merger, consolidation or otherwise), that would adversely affect the rights, preferences or privileges of the Minority Stockholder; unless such amendment, alteration, change, repeal or waiver applies equally in such adverse manner and same proportion to the Principal Stockholder;

(iii) make any material change, through acquisitions, dispositions of assets, or otherwise, in the nature of the business of the Company and its Subsidiaries unless such action is approved by both Independent Directors designated pursuant to Section 6.1(a)(ii)(C); or

(iv) enter into any contract, agreement, commitment or understanding with respect to any of the foregoing.

6.2 Termination of Section 6.1. From and after the date that any Stockholder entitled to designate an individual for Board membership and its Permitted Transferees hold in the aggregate Shares representing less than 50% of the Shares held in the aggregate by them on the date hereof (after taking into account any recapitalization, stock split or similar corporate action), such Stockholder and its Permitted Transferees shall no longer be entitled to designate any directors for election or removal pursuant to Section 6.1(a); provided, that the rights granted pursuant to Section 6.1(a) to designate an individual for Board membership may, at the option of the transferring Stockholder, be transferred, in whole but not in part, to any transferee of Shares from the Principal Stockholder or the Minority Stockholder in one or a series of related transactions pursuant to which such transferee acquires at least 50% of the Shares held in the aggregate by either the Principal Stockholder or the Minority Stockholder and their respective Permitted Transferees on the date hereof(after taking into account any recapitalization, stock split or similar corporate action), as applicable; provided, further that any director then serving who had been designated by such transferring Stockholder shall offer to resign immediately. From and after the date that the Minority Stockholder and its Permitted Transferees hold in the

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aggregate Shares representing less than 50% of the Shares held in the aggregate by them on the date hereof (after taking into account any recapitalization, stock split or similar corporate action), the affirmative vote or written consent of the Minority Stockholder shall no longer be required for purposes of Section 6.1(b); provided, that the rights granted pursuant to Section 6.1(b) may be transferred to any transferee of Shares from the Minority Stockholder in one or a series of related transactions pursuant to which such transferee acquires at least 50% of the Shares held in the aggregate by the Minority Stockholder and its Permitted Transferees on the date hereof (after taking into account any recapitalization, stock split or similar corporate action).

6.3 Irrevocable Proxy. In order to effectuate Section 6.1 and in addition to and not in lieu of Section 6.1, each Stockholder hereby grants to the Secretary of the Company an irrevocable proxy solely for the purpose of voting all of the Shares held by the grantor of the proxy for the election of directors nominated only in accordance with Section 6.1.

6.4 Liability Insurance. Within 90 days after the date hereof, the Company shall take, or cause to be taken, all commercially reasonable action necessary to cause the Company to maintain a directors’ liability insurance policy that is acceptable in all reasonable respects to the directors designated by the Principal Stockholder and the Minority Stockholder.

STOCK CERTIFICATE LEGEND.

A copy of this Agreement shall be filed with the Secretary of the Company and kept with the records of the Company. Each certificate representing Shares now held or hereafter acquired by any Stockholder shall bear legends substantially in the following form:

THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION (EACH A “TRANSFER”) AND VOTING OF ANY OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE STOCKHOLDERS AGREEMENT, DATED AS OF APRIL 10, 2006, AMONG THE COMPANY AND THE STOCKHOLDERS NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED AT THE COMPANY’S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF SUCH STOCKHOLDERS AGREEMENT.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

8. MANAGEMENT STOCKHOLDERS.

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8.1 Call by the Company to the Management Stockholders.

(a) Right to Purchase. Subject to all paragraphs of this Section 8.1 and to Sections 8.2, 8.3 and 8.4, the Company shall have the right to purchase from a Management Stockholder, and such Management Stockholder shall have the obligation to sell to the Company, all, but not less than all, of such Management Stockholder’s Shares:

(i) at the Fair Market Value of the Shares to be purchased if such Management Stockholder’s employment with the Company or any of its Subsidiaries is terminated as a result of (A) the termination by the Company or any such subsidiary of such employment without Cause, (B) the death or Disability of such Management Stockholder, (C) the resignation of such Management Stockholder for Good Reason, or (D) the Retirement of such Management Stockholder;

(ii) at the lesser of the Fair Market Value and the Carrying Value of the Shares to be purchased if such Management Stockholder’s employment with the Company or any of its Subsidiaries is terminated by the Company or any such subsidiary for Cause; or

(iii) at the Fair Market Value or the Carrying Value of the Shares to be purchased, in the sole discretion of the Board of Directors, if such Management Stockholder’s employment with the Company or any of its Subsidiaries is terminated for any reason other than as a result of an event described in clauses (i) or (ii) of this Section 8.1(a).

(b) Notice. If the Company desires to purchase Shares from a Management Stockholder pursuant to Section 8.1(a), it shall notify such Management Stockholder not more than 60 days after the occurrence of the event giving rise to the Company’s right to acquire such Management Stockholder’s Shares.

8.2 Prohibited Purchases. Notwithstanding anything to the contrary herein, the Company shall not be permitted or obligated to purchase any Shares from a Management Stockholder hereunder to the extent (i) the Company is prohibited from purchasing such Shares by applicable law or by any debt instruments or agreements, including any amendment, renewal, extension, substitution, refinancing, replacement or other modification thereof (the “Financing Documents”) entered into by the Company or any of its direct or indirect Subsidiaries, (ii) a default has occurred under any Financing Document and is continuing, (iii) the purchase of such Shares would, or in the opinion of the Board of Directors might, result in the occurrence of an event of default under any Financing Document or create a condition which would or might, with notice or lapse of time or both, result in such an event of default, or (iv) the purchase of such Shares would, in the reasonable opinion of the Board of Directors, be imprudent in view of the financial condition (present or projected) of the Company or any of its Subsidiaries or the anticipated impact of the purchase of such Shares on the Company’s or any of its Subsidiaries’ ability to meet their respective obligations under any Financing Document. If Shares which the Company has the right or obligation to purchase on any date exceed the total amount permitted to be purchased on such date pursuant to the preceding sentence (the “Maximum Amount”), the

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Company shall purchase on such date only that number of Shares up to the Maximum Amount (if any) (and shall not be required to purchase more than the Maximum Amount) in such amounts as the Board of Directors shall in good faith determine, applying the following order of priority:

(A) First, the Shares of all Management Stockholders whose Shares are being purchased by the Company by reason of termination of employment due to death or Disability and, to the extent that the number of Shares that the Company is obligated to purchase from such Management Stockholders (but for this Section 8.2) exceeds the Maximum Amount, such Shares pro rata among such Management Stockholders on the basis of the number of Shares held by each of such Management Stockholders that the Company is obligated or has the right to purchase, and

(B) Second, to the extent that the Maximum Amount is in excess of the amount the Company purchases pursuant to clause (A) above, the Shares of all Management Stockholders whose Shares are being purchased by the Company by reason of termination of employment without Cause or due to Retirement or resignation for Good Reason up to the Maximum Amount and, to the extent that the number of Shares that the Company is obligated to purchase from such Management Stockholders (but for this Section 8.2) exceeds the Maximum Amount, such Shares pro rata among such Management Stockholders on the basis of the number of Shares held by each of such Management Stockholders that the Company is obligated or has the right to purchase, and

(C) Third, to the extent the Maximum Amount is in excess of the amounts the Company purchases pursuant to clauses (A) and (B) above, the Shares of all other Management Stockholders whose Shares are being purchased by the Company up to the Maximum Amount and, to the extent that the number of Shares that the Company is obligated to purchase from such Management Stockholders (but for this Section 8.2) exceeds the Maximum Amount, the Shares of such Management Stockholders in such order of priority and in such amounts as the Board of Directors in its sole discretion shall in good faith determine to be appropriate under the circumstances.

Notwithstanding anything to the contrary contained in this Agreement, if the Company is unable to make any payment when due to any Management Stockholder under this Agreement by reason of this Section 8.2, the Company shall make such payment at the earliest practicable date permitted under this Section 8.2.

8.3 Closing; Payment. Subject to Section 8.2, the closing of the purchase of Shares by the Company from a Management Stockholder pursuant to Section 8.1 shall be held at the principal offices of the Company during the 30-day period following the date of the determination of Fair Market Value or Carrying Value, as the case may be.

8.4 Management Sales Not Subject to Section 3.2 Procedures; Transfers by Management Stockholders to Permitted Transferees. Any sale pursuant to Section 8.1 may be made without complying with the provisions of Section 3.2. Any Shares transferred pursuant to Section 3.1(b) to a Permitted Transferee shall continue to be subject to the provisions of this Section 8 as though the transferring Management Stockholder were the holder of such Shares.

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9. MISCELLANEOUS.

9.1 Additional Parties. If the Company issues Common Stock or Common Stock Equivalents to any Person (other than pursuant to a Registered Sale), such Person shall execute an Instrument of Accession in the form of Exhibit A hereto and become a party hereto and, if such Person is a resident of a state with a community property system, cause his or her spouse to execute a Spousal Waiver in the form of Exhibit B attached hereto, and deliver such Instrument and Spousal Waiver, if applicable, to the Company. Upon such execution and delivery, such Person shall be deemed a ‘Stockholder’ for purposes of this Agreement.

9.2 Notices. Any notice, payment, demand or communication (collectively, a “notice”) required or permitted to be given by this Agreement or applicable law shall be in writing and sent by first class mail, overnight courier, hand delivery or telephone conversation or e-mail; except, unless waived by the recipient, if such notice is made by telephone conversation or e-mail, such telephone conversation or e-mail shall be followed within 48 hours thereof by written notice sent by first class mail, overnight courier or hand delivery. Charges for any notice hereunder shall be prepaid and addressed as follows, or to such other address as such Person may from time to time specify by notice to the Stockholders or the Company, as the case may be:

(a) if to the Company, to the Company at 377 Neva Lane, Denison, Texas, 75020 Attention John Cawthron; and

(b) if to a Stockholder, to the address set forth in Schedule 1 hereto.

Unless otherwise indicated herein, any notice shall be deemed to be delivered, given and received for all purposes as of the date delivered, or (x) if sent by first class mail, five business days after the date on which the same was deposited in a receptacle, regularly maintained by the United States Postal Service for the deposit of mail, or (y) if sent by overnight delivery with a nationally recognized overnight delivery service upon receipt, whichever occurs first.

9.3 No Third-Party Beneficiaries. This Agreement is made solely and specifically among and for the benefit of the Stockholders and their respective permitted successors and assigns, and no other Person, unless express provision is made herein to the contrary, shall have any rights, interests or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third-party beneficiary or otherwise.

9.4 References to this Agreement; Headings; Scope. Unless otherwise indicated, “Articles,” “Sections,” “Subsections” and “Clauses” mean and refer to designated Articles, Sections, Subsections and Clauses of this Agreement. Words such as “herein,” “hereby,” “hereinafter,” “hereof,” “hereto” and “hereunder” refer to this Agreement as a whole, unless the context indicates otherwise. All headings in this Agreement are for convenience of reference only and are not intended to define or limit the scope or intent of this Agreement. This Agreement and the Registration Rights constitutes the entire understanding of the Stockholders with respect to the subject matter hereof and supersedes all prior understandings and agreements in regard hereto. All exhibits, schedules, instruments and other documents referred to herein,

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and as the same may be amended from time to time, are by this reference made a part hereof as though fully set forth herein.

9.5 Validity of Agreement; Severability. Every provision of this Agreement is intended to be severable. If any provision hereof is illegal, invalid or unenforceable for any reason whatsoever, such provision will be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision were not a part of this Agreement; and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the invalid or unenforceable provision or by its severance from this Agreement. Further, in lieu of such illegal, invalid, or unenforceable provision, there will be automatically included, as part of this Agreement, a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. In the event the laws of the State of Delaware or other controlling law is subsequently amended or interpreted in such a way to make any provision of this Agreement that was formerly invalid valid, such provision shall be considered to be valid from the date provided in such interpretation or amendment or in the event the interpretation or amendment does not otherwise provide, from the effective date of such interpretation or amendment.

9.6 Further Action. Each Stockholder, upon the request of the Board of Directors or any other Stockholder, agrees to perform all further acts and execute, acknowledge, or deliver any instruments or documents and to perform such additional acts as may be reasonably necessary, appropriate or desirable to carry out the provisions of this Agreement.

9.7 Governing Law. The laws of the State of Delaware, without reference to conflict of laws principles, shall govern the validity, construction and interpretation of this Agreement.

9.8 Counterpart Execution. This Agreement may be executed in any number of counterparts with the same effect as if the parties hereto had signed the same document.

9.9 No Implied Waiver. The Stockholders and the Company shall have the right at all times to enforce the provisions of this Agreement in strict accordance with the terms hereof, and no waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver constitute a continuing waiver unless otherwise provided in writing.

9.10 Jurisdiction. Each party to this Agreement hereby irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or any agreements or transactions contemplated hereby may be brought exclusively in the courts of the State of Delaware and hereby expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the address provided to the Company in accordance with Section 9.2, such service to become effective 10 days after such mailing.

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9.11 Amendments. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the Principal Stockholder, the Minority Stockholder and the Company or, in the case of a waiver, by the party waiving compliance.

9.12 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

9.13 Entire Agreement. This Agreement, the Registration Rights Agreement and the Transaction Agreement (collectively, the “Other Agreements”) are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement shall be deemed incorporated by reference into the Company’s Certificate of Incorporation and Bylaws and such Certificate of Incorporation and Bylaws shall be construed and interpreted in a manner consistent with this Agreement. There are no restrictions, promises, representations, warranties, covenants or undertakings relating to such subject matter, other than those set forth or referred to herein or in the Other Agreements. This Agreement and the Other Agreements supersede all prior agreements and understandings between the Company and the other parties to this Agreement with respect to such subject matter.

9.14 Escrow. If the Merger is not consummated in accordance with the terms of that certain Agreement and Plan of Merger (the “Merger Agreement”) by and between the Company and Timco as contemplated by the Transaction Agreement or if the Merger Agreement is terminated, the Company and the Principal Stockholder shall take all such necessary and required action to cause the Escrow Agent (as defined in that certain Escrow Agreement by and between Timco and the Company as contemplated by the Transaction Agreement (the “Escrow Agreement”) to release and deliver to the Principal Stockholder 80.52% of the Escrow (as defined in the Esc row Agreement) and to the Minority Stockholder 19.48% of the Escrow, in accordance with such Escrow Agreement, including issuing joint instructions to release such funds as contemplated therewith.

10. TERMINATION.

10.1 Termination as to Stockholder. This Agreement shall terminate as to any Stockholder at such time as the Stockholder shall beneficially own no Shares; provided, however, that the provisions of this Agreement shall continue in effect for the purpose of enforcing all obligations and undertakings having theretofore become operative; and provided further, that a transfer of Shares not explicitly permitted under this Agreement shall not relieve a Stockholder of any of its obligations hereunder.

10.2 Termination of Agreement. This Agreement shall continue in effect until termination of this Agreement by written agreement of the Principal Stockholder and the Minority Stockholder.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.


		STOCKHOLDERS

		LJH, LTD.

		By:
		Name:		Lacy Harber
		Title:

		OWL CREEK I L.P.
		By:		Owl creek Advisors, LLC its General Partner

		By:
		Name:		Jeffrey Altman
		Title:		Managing Member

		OWL CREEK II L.P.
		By:		Owl creek Advisors, LLC its General Partner

		By:
		Name:		Jeffrey Altman
		Title:		Managing Member

		OWL CREEK OVERSEAS FUND LTD.

		By:
		Name:		Jeffrey Altman
		Title:		Director

		OWL CREEK OVERSEAS FUND II, LTD.

		By:
		Name:		Jeffrey Altman
		Title:		Director

		THE COMPANY

		TAS HOLDING, INC.

		By:
		Name:
		Title:

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ANNEX A

Owl Creek I, L.P.
Owl Creek II, L.P.
Owl Creek Overseas Fund, Ltd.
Owl Creek Overseas Fund II, Ltd.

SA-1

EXHIBIT A

INSTRUMENT OF ACCESSION

The undersigned, ___, as a condition precedent to becoming the owner or holder of record of ___( ) shares of [description of securities], of TAS Holding, Inc., a Delaware corporation (“Company”), hereby agrees to become a stockholder, party to and bound by that certain Stockholders Agreement, dated as of ___, 2006, by and among the Company and certain stockholders of the Company. This Instrument of Accession shall take effect and shall become an integral part of said Stockholders Agreement immediately upon execution and delivery to the Company of this Instrument.

IN WITNESS WHEREOF, this INSTRUMENT OF ACCESSION has been duly executed by or on behalf of the undersigned as of the date below written.


		[For Entities]



		By:
				Name: Title:

		[For Individuals]


		Name:

		Address:




		Date:

Accepted:
TAS HOLDING, INC.


By:

Date:

EXHIBIT B

ONLY INCLUDE THIS EXHIBIT B AS AN ATTACHMENT TO YOUR AGREEMENT IF YOU INCLUDED THE REFERENCE TO A SPOUSAL WAIVER IN SECTION 3 THEREOF.

SPOUSAL WAIVER

___[Insert Name of Spouse] hereby waives and releases any and all equitable or legal claims and rights, actual, inchoate or contingent, which ___[insert ‘he’ or ‘she’] may acquire with respect to the disposition, voting or control of the Shares subject to the Stockholders Agreement, dated as of ___, as the same may be amended from time to time, except for rights in respect of the proceeds of any disposition of such Shares.


		[Signature of Spouse]

SCHEDULE 1

Principal Stockholder—377 Neva Lane, Denison, TX 75020 Attention: Lacy Harber
with a copy to with a copy to Bracewell & Giuliani, LLP, 500 N. Akard Street, Suite 4000, Dallas, Texas 75201-3387 Attention: Michael W. Tankersley, Esq.,

Minority Stockholder— 640 Fifth Avenue, 20th Floor New York, NY 10019 Attention : Daniel Sapadin—CFO
with a copy to Schulte Roth & Zabel LLP 919 Third Avenue New York, NY 10022 Attention: Peter J. Halasz, Esq.

EX-99.7 8 d34971exv99w7.htm REGISTRATION RIGHTS AGREEMENT exv99w7

Exhibit 99.7

EXECUTION COPY

REGISTRATION RIGHTS AGREEMENT

by and among

TAS HOLDING, INC.

and

THE INITIAL HOLDERS SPECIFIED ON
THE SIGNATURE PAGES HEREOF

Dated as of April 10, 2006

REGISTRATION RIGHTS AGREEMENT (this or the “Agreement”) dated as of April 10, 2006, by and among TAS Holding, Inc., a Delaware corporation (the “Company”), and the Initial Holders specified on the signature pages to this Agreement.

W I T N E S S E T H :

WHEREAS, simultaneously herewith, the Company and the Initial Holders are entering into a Transaction Agreement (the “Transaction Agreement”), pursuant to which the Company is issuing, and the Initial Holders are purchasing, certain securities of the Company; and

WHEREAS, in order to induce the Initial Holders to enter into the Transaction Agreement, the Company has agreed to provide certain registration rights on the terms and subject to the conditions set forth herein;

1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings:

“Affiliate” shall mean (i) with respect to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person, and (ii) with respect to any individual, shall also mean the spouse, sibling, child, step-child, grandchild, niece, nephew or parent of such Person, or the spouse thereof.

“Blackout Period” shall have the meaning set forth in Section 2.6.

“Common Shares” shall mean shares of common stock, par value $0.01 per share, of the Company.

“Demand Registration” shall mean a registration required to be effected by the Company pursuant to Section 2.1.

“Demand Registration Statement” shall mean a registration statement of the Company which covers the Registrable Securities requested to be included therein pursuant to the provisions of Section 2.1 and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference (or deemed to be incorporated by reference) therein.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations thereunder, or any successor statute.

“Holders” shall mean each of the Initial Holders for so long as it owns any Registrable Securities and such of its respective heirs, successors and permitted assigns (including any permitted transferees of Registrable Securities) who acquire or are otherwise the transferee of Registrable Securities, directly or indirectly, from such Initial Holder (or any subsequent Holder), for so long as such heirs, successors and permitted assigns own any Registrable Securities. For purposes of this Agreement, a Person will be deemed to be a Holder whenever such Person holds an option to purchase, or a security convertible into or exercisable or exchangeable for, Registrable Securities, whether or not such purchase, conversion, exercise or exchange has actually been effected and disregarding any legal restrictions upon the exercise of such rights. Registrable Securities issuable upon exercise of an option or upon conversion, exchange or exercise of another security shall be deemed outstanding for the purposes of this Agreement.

“Holders’ Counsel” shall mean one firm of counsel (per registration) to the Holders of Registrable Securities participating in such registration, which counsel shall be selected (i) in the case of a Demand Registration or an S-3 Registration, by the Initiating Holders holding a majority of the Registrable Securities for which registration was requested in the Request, and (ii) in all other cases, by the Majority Holders of the Registration.

“Incidental Registration” shall mean a registration required to be effected by the Company pursuant to Section 2.2.

“Incidental Registration Statement” shall mean a registration statement of the Company which covers the Registrable Securities requested to be included therein pursuant to the provisions of Section 2.2 and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference (or deemed to be incorporated by reference) therein.

“Initial Holders” shall mean the Persons specified as such on the signature pages to this Agreement on the date hereof.

“Initial Public Offering” shall mean the first public offering of any class of securities of the Company pursuant to a registration statement filed with and declared effective by the SEC.

“Initiating Holders” shall mean, with respect to a particular registration, the Holders who initiated the Request for such registration.

“Inspectors” shall have the meaning set forth in Section 4.1(g).

“Majority Holders” shall mean one or more Holders of Registrable Securities who would hold a majority of the Registrable Securities then outstanding.

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“Majority Holders of the Registration” shall mean, with respect to a particular registration, one or more Holders of Registrable Securities who would hold a majority of the Registrable Securities to be included in such registration.

“Minority Stockholder” means collectively, Owl Creek I, L.P., Owl Creek II, L.P., Owl Creek Overseas Fund, Ltd. and Owl Creek Overseas Fund II, Ltd.

“NASD” shall mean the National Association of Securities Dealers, Inc.

“Principal Stockholder” means LJH, LTD.

“Prospectus” shall mean the prospectus included in a Registration Statement (including, without limitation, any preliminary prospectus and any prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), and any such Prospectus as amended or supplemented by any prospectus supplement, and all other amendments and supplements to such Prospectus, including post-effective amendments, and in each case including all material incorporated by reference (or deemed to be incorporated by reference) therein.

“Registrable Securities” shall mean (i) any Common Shares issued to the Initial Holders pursuant to the Transaction Agreement; (ii) any Common Shares otherwise or hereafter purchased or acquired by the Holders or their Affiliates and (iii) any other securities of the Company (or any successor or assign of the Company, whether by merger, consolidation, sale of assets or otherwise) which may be issued or issuable with respect to, in exchange for, or in substitution of, Registrable Securities referenced in clauses (i) through (ii) above by reason of any dividend or stock split, combination of shares, merger, consolidation, recapitalization, reclassification, reorganization, sale of assets or similar transaction. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (A) a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (B) all such securities are sold pursuant to Rule 144 (or any similar provisions then in force) under the Securities Act, (C) such securities have been otherwise transferred, a new certificate or other evidence of ownership for them not bearing the legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act, or (D) such securities shall have ceased to be outstanding.

“Registration Expenses” shall mean any and all expenses incident to performance of or compliance with this Agreement by the Company and its subsidiaries, including, without limitation (i) all SEC, stock exchange, NASD and other registration, listing and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky

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laws and compliance with the rules of any stock exchange (including fees and disbursements of counsel in connection with such compliance and the preparation of a blue sky memorandum and legal investment survey), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing, distributing, mailing and delivering any Registration Statement, any Prospectus, any underwriting agreements, transmittal letters, securities sales agreements, securities certificates and other documents relating to the performance of or compliance with this Agreement, (iv) the fees and disbursements of counsel for the Company, (v) the fees and disbursements of Holders’ Counsel, (vi) the fees and disbursements of all independent public accountants (including the expenses of any audit and/or “cold comfort” letters) and the fees and expenses of other Persons, including experts, retained by the Company, (vii) the expenses incurred in connection with making road show presentations and holding meetings with potential investors to facilitate the distribution and sale of Registrable Securities which are customarily borne by the issuer, (viii) any fees and disbursements of underwriters customarily paid by issuers or sellers of securities, and (ix) premiums and other costs of policies of insurance against liabilities arising out of the public offering of the Registrable Securities being registered; provided, however, Registration Expenses shall not include discounts and commissions payable to underwriters, selling brokers, dealer managers or other similar Persons engaged in the distribution of any of the Registrable Securities; and provided further, that in any case where Registration Expenses are not to be borne by the Company, such expenses shall not include salaries of Company personnel or general overhead expenses of the Company, auditing fees, premiums or other expenses relating to liability insurance required by underwriters of the Company or other expenses for the preparation of financial statements or other data normally prepared by the Company in the ordinary course of its business or which the Company would have incurred in any event; and provided, further, that in the event the Company shall, in accordance with Section 2.2 or Section 2.6 hereof, not register any securities with respect to which it had given written notice of its intention to register to Holders, notwithstanding anything to the contrary in the foregoing, all of the costs incurred by the Holders in connection with such registration shall be deemed to be Registration Expenses.

“Registration Statement” shall mean any registration statement of the Company which covers any Registrable Securities and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference (or deemed to be incorporated by reference) therein.

“Request” shall have the meaning set forth in Section 2.1(a).

“S-3 Registration” shall mean a registration required to be effected by the Company pursuant to Section 2.3(a).

“SEC” shall mean the Securities and Exchange Commission, or any successor agency having jurisdiction to enforce the Securities Act.

“Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations thereunder, or any successor statute.

“Shelf Registration” shall have the meaning set forth in Section 2.1(a).

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“Transaction Agreement” shall have the meaning set forth in the preamble.

“Underwriters” shall mean the underwriters, if any, of the offering being registered under the Securities Act.

“Underwritten Offering” shall mean a sale of securities of the Company to an Underwriter or Underwriters for reoffering to the public.

“Withdrawn Demand Registration” shall have the meaning set forth in Section 2.1(a).

“Withdrawn Request” shall have the meaning set forth in Section 2.1(a).

2. REGISTRATION UNDER THE SECURITIES ACT.

2.1 Demand Registration.

(a) Right to Demand Registration. Subject to Section 2.1(c), at any time or from time to time the Principal Stockholder and the Minority Stockholder shall have the right to request in writing that the Company register all or part of such Holders’ Registrable Securities (a “Request”) (which Request shall specify the amount of Registrable Securities intended to be disposed of by such Holders and the intended method of disposition thereof) by filing with the SEC a Demand Registration Statement. As promptly as practicable, but no later than 10 days after receipt of a Request, the Company shall give written notice of such requested registration to all Holders of Registrable Securities. Subject to Section 2.1(b), the Company shall include in a Demand Registration (i) the Registrable Securities intended to be disposed of by the Initiating Holders and (ii) the Registrable Securities intended to be disposed of by any other Holder which shall have made a written request (which request shall specify the amount of Registrable Securities to be registered and the intended method of disposition thereof) to the Company for inclusion thereof in such registration within 20 days after the receipt of such written notice from the Company. The Company shall, as expeditiously as possible following a Request, use its best efforts to cause to be filed with the SEC a Demand Registration Statement providing for the registration under the Securities Act of the Registrable Securities which the Company has been so requested to register by all such Holders, to the extent necessary to permit the disposition of such Registrable Securities so to be registered in accordance with the intended methods of disposition thereof specified in such Request or further requests (including, without limitation, by means of a shelf registration pursuant to Rule 415 under the Securities Act (a “Shelf Registration”) if so requested and if the Company is then eligible to use such a registration). The Company shall use its best efforts to have such Demand Registration Statement declared effective by the SEC as soon as practicable thereafter and to keep such Demand Registration Statement continuously effective for the period specified in Section 4.1(b).

A Request may be withdrawn prior to the filing of the Demand Registration Statement by the Initiating Holders for which registration was requested in the Request (a “Withdrawn Request”) and a Demand Registration Statement may be withdrawn prior to the effectiveness thereof by the Initiating Holders for which registration was requested in the Request (a “Withdrawn Demand Registration”), and such withdrawals shall be treated as a Demand Registration which shall have been effected pursuant to this Section 2.1, unless the

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Holders of Registrable Securities to be included in such Registration Statement reimburse the Company for its reasonable out-of-pocket Registration Expenses relating to the preparation and filing of such Demand Registration Statement (to the extent actually incurred); provided; however, that if a Withdrawn Request or Withdrawn Registration Statement is made (A) because of a material adverse change in the business, financial condition or prospects of the Company, or (B) because the sole or lead managing Underwriter advises that the amount of Registrable Securities to be sold in such offering be reduced pursuant to Section 2.1(b) by more than 10% of the Registrable Securities to be included in such Registration Statement, or (C) because of a postponement of such registration pursuant to Section 2.6, then such withdrawal shall not be treated as a Demand Registration effected pursuant to this Section 2.1 (and shall not be counted toward the number of Demand Registrations), and the Company shall pay all Registration Expenses in connection therewith. Any Holder requesting inclusion in a Demand Registration may, at any time prior to the effective date of the Demand Registration Statement (and for any reason) revoke such request by delivering written notice to the Company revoking such requested inclusion.

The registration rights granted pursuant to the provisions of this Section 2.1 shall be in addition to the registration rights granted pursuant to the other provisions of Section 2 hereof.

(b) Priority in Demand Registrations. If a Demand Registration involves an Underwritten Offering, and the sole or lead managing Underwriter, as the case may be, of such Underwritten Offering shall advise the Company in writing (with a copy to each Holder requesting registration) on or before the date five days prior to the date then scheduled for such offering that, in its opinion, the amount of Registrable Securities requested to be included in such Demand Registration exceeds the number which can be sold in such offering within a price range acceptable to the Majority Holders of the Registration (such writing to state the basis of such opinion and the approximate number of Registrable Securities which may be included in such offering), the Company shall include in such Demand Registration, to the extent of the number which the Company is so advised may be included in such offering, the Registrable Securities requested to be included in the Demand Registration by the Holders allocated pro rata in proportion to the number of Registrable Securities requested to be included in such Demand Registration by each of them. In the event the Company shall not, by virtue of this Section 2.1(b), include in any Demand Registration all of the Registrable Securities of any Holder requesting to be included in such Demand Registration, such Holder may, upon written notice to the Company given within five days of the time such Holder first is notified of such matter, reduce the amount of Registrable Securities it desires to have included in such Demand Registration, whereupon only the Registrable Securities, if any, it desires to have included will be so included and the Holders not so reducing shall be entitled to a corresponding increase in the amount of Registrable Securities to be included in such Demand Registration.

(c) Limitations on Registrations. The rights of Holders of Registrable Securities to request Demand Registrations pursuant to Section 2.1(a) are subject to the following limitations: (i) in no event shall the Company be required to effect a Demand Registration until after March 15, 2008,(ii) the Company shall not be obligated to effect a Demand Registration unless 150 days have elapsed since the last day that a prior Demand Registration Statement remained effective (or, if earlier, the day on which the last of the

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Registrable Securities covered by such prior Demand Registration Statement was sold), and (iii) in no event shall the Company be required to pay Registration Expenses of more than two Demand Registrations by each of the Principal Stockholder and the Minority Stockholder; provided, however, (i) that such number shall be increased to the extent the Company does not include in what would otherwise be the final registration for which the Company is required to pay Registration Expenses the number of Registrable Securities requested to be registered by the Holders by reason of Section 2.1(b) and (ii) the Minority Stockholder shall be deemed not to have exercised a demand right to the extent the Principal Stockholder exercises its rights under Section 3.7 of the Stockholders’ Agreement; and provided, further, that the Registration Expenses in connection with each other Demand Registration shall be allocated pro rata among all Persons on whose behalf securities of the Company are included in such registration, on the basis of the respective amounts of the securities then being registered on their behalf.

(d) Underwriting; Selection of Underwriters. Notwithstanding anything to the contrary contained in Section 2.1(a), if the Initiating Holders for which registration was requested in the Request so elect, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of a firm commitment Underwritten Offering; and such Initiating Holders may require that all Persons (including other Holders) participating in such registration sell their Registrable Securities to the Underwriters at the same price and on the same terms of underwriting applicable to the Initiating Holders. If any Demand Registration involves an Underwritten Offering, the sole or managing Underwriters and any additional investment bankers and managers to be used in connection with such registration shall be selected by the Initiating Holders for which registration was requested in the Request, subject to the approval of the Company (such approval not to be unreasonably withheld).

(e) Registration of Other Securities. Whenever the Company shall effect a Demand Registration, no securities other than the Registrable Securities shall be covered by such registration unless the Initiating Holders for which registration was requested in the Request shall have consented in writing to the inclusion of such other securities.

(f) Effective Registration Statement; Suspension. A Demand Registration Statement shall not be deemed to have become effective (and the related registration will not be deemed to have been effected) (i) unless it has been declared effective by the SEC and remains effective in compliance with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Demand Registration Statement for the time period specified in Section 4.1(b), (ii) if the offering of any Registrable Securities pursuant to such Demand Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, or (iii) if, in the case of an Underwritten Offering, the conditions to closing specified in an underwriting agreement to which the Company is a party are not satisfied other than by the sole reason of any breach or failure by the Holders of Registrable Securities or are not otherwise waived.

(g) Other Registrations. During the period (i) beginning on the date of a Request and (ii) ending on the date that is 90 days after the date that a Demand Registration Statement filed pursuant to such Request has been declared effective by the SEC or, if the Holders shall withdraw such Request or such Demand Registration Statement, on the date of such Withdrawn Request or such Withdrawn Registration Statement, the Company shall not,

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without the consent of the Initiating Holders for which registration was requested in the Request, file a registration statement pertaining to any other securities of the Company.

(h) Registration Statement Form. Registrations under this Section 2.1 shall be on such appropriate registration form of the SEC (i) as shall be selected by the Initiating Holders for which registration was requested in the Request, and (ii) which shall be available for the sale of Registrable Securities in accordance with the intended method or methods of disposition specified in the requests for registration. The Company agrees to include in any such Registration Statement all information which any selling Holder, upon advice of counsel, shall reasonably request.

2.2 Incidental Registration.

(a) Right to Include Registrable Securities. If the Company at any time or from time to time proposes to register any of its securities under the Securities Act (other than in a registration on Form S-4 or S-8 or any successor form to such forms and other than pursuant to Section 2.1 or 2.3) whether or not pursuant to registration rights granted to other holders of its securities and whether or not for sale for its own account, the Company shall deliver prompt written notice (which notice shall be given at least 30 days prior to such proposed registration) to all Holders of Registrable Securities of its intention to undertake such registration, describing in reasonable detail the proposed registration and distribution (including the anticipated range of the proposed offering price, the class and number of securities proposed to be registered and the distribution arrangements) and of such Holders’ right to participate in such registration under this Section 2.2 as hereinafter provided. Subject to the other provisions of this paragraph (a) and Section 2.2(b), upon the written request of any Holder made within 20 days after the receipt of such written notice (which request shall specify the amount of Registrable Securities to be registered and the intended method of disposition thereof), the Company shall effect the registration under the Securities Act of all Registrable Securities requested by Holders to be so registered (an “Incidental Registration”), to the extent requisite to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be registered, by inclusion of such Registrable Securities in the Registration Statement which covers the securities which the Company proposes to register and shall cause such Registration Statement to become and remain effective with respect to such Registrable Securities in accordance with the registration procedures set forth in Section 4. If an Incidental Registration involves an Underwritten Offering, immediately upon notification to the Company from the Underwriter of the price at which such securities are to be sold, the Company shall so advise each participating Holder. The Holders requesting inclusion in an Incidental Registration may, at any time prior to the effective date of the Incidental Registration Statement (and for any reason), revoke such request by delivering written notice to the Company revoking such requested inclusion.

If at any time after giving written notice of its intention to register any securities and prior to the effective date of the Incidental Registration Statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to each Holder of Registrable Securities and, thereupon, (A) in the case of a determination not to register, the Company shall be relieved of its obligation to register any

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Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith), without prejudice, however, to the rights of Holders to cause such registration to be effected as a registration under Section 2.1 or 2.3(a), and (B) in the case of a determination to delay such registration, the Company shall be permitted to delay the registration of such Registrable Securities for the same period as the delay in registering such other securities; provided, however, that if such delay shall extend beyond 120 days from the date the Company received a request to include Registrable Securities in such Incidental Registration, then the Company shall again give all Holders the opportunity to participate therein and shall follow the notification procedures set forth in the preceding paragraph. There is no limitation on the number of such Incidental Registrations pursuant to this Section 2.2 which the Company is obligated to effect.

The registration rights granted pursuant to the provisions of this Section 2.2 shall be in addition to the registration rights granted pursuant to the other provisions of Section 2 hereof.

(b) Priority in Incidental Registration. If an Incidental Registration involves an Underwritten Offering (on a firm commitment basis), and the sole or the lead managing Underwriter, as the case may be, of such Underwritten Offering shall advise the Company in writing (with a copy to each Holder requesting registration) on or before the date five days prior to the date then scheduled for such offering that, in its opinion, the amount of securities (including Registrable Securities) requested to be included in such registration exceeds the amount which can be sold in such offering without interfering with the successful marketing of the securities being offered (such writing to state the basis of such opinion and the approximate number of such securities which may be included in such offering without such effect), the Company shall include in such registration, to the extent of the number which the Company is so advised may be included in such offering without such effect, (i) in the case of a registration initiated by the Company, (A) first, the securities that the Company proposes to register for its own account, (B) second, the Registrable Securities requested to be included in such registration by the Holders, allocated pro rata in proportion to the number of Registrable Securities requested to be included in such registration by each of them, and (C) third, other securities of the Company to be registered on behalf of any other Person, and (ii) in the case of a registration initiated by a Person other than the Company, (A) first, the Registrable Securities requested to be included in such registration by the Holders and by any Persons initiating such registration, allocated pro rata in proportion to the number of securities requested to be included in such registration by each of them, (B) second, the securities that the Company proposes to register for its own account, and (C) third, other securities of the Company to be registered on behalf of any other Person; provided, however, that in the event the Company will not, by virtue of this Section 2.2(b), include in any such registration all of the Registrable Securities of any Holder requested to be included in such registration, such Holder may, upon written notice to the Company given within three days of the time such Holder first is notified of such matter, reduce the amount of Registrable Securities it desires to have included in such registration, whereupon only the Registrable Securities, if any, it desires to have included will be so included and the Holders not so reducing shall be entitled to a corresponding increase in the amount of Registrable Securities to be included in such registration.

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(c) Selection of Underwriters. If any Incidental Registration involves an Underwritten Offering, the sole or managing Underwriter(s) and any additional investment bankers and managers to be used in connection with such registration shall be subject to the approval of the Majority Holders of the Registration (such approval not to be unreasonably withheld).

2.3 S-3 Registration; Shelf Registration.

(a) S-3 Registration. If at any time (i) one or more Holders of Registrable Securities representing 10% or more of the Registrable Securities then outstanding request that the Company file a registration statement on Form S-3 or any successor form thereto for a public offering of all or any portion of the shares of Registrable Securities held by such Holder or Holders, the reasonably anticipated aggregate price to the public of which would exceed $1,000,000, and (ii) the Company is a registrant entitled to use Form S-3 or any successor form thereto to register such securities, then the Company shall, as expeditiously as possible following such Request, use its best efforts to register under the Securities Act on Form S-3 or any successor form thereto, for public sale in accordance with the intended methods of disposition specified in such Request or any subsequent requests (including, without limitation, by means of a Shelf Registration) the Registrable Securities specified in such Request and any subsequent requests; provided, that if such registration is for an Underwritten Offering, the terms of Sections 2.1(b) and 2.1(d) shall apply (and any reference to “Demand Registration” therein shall, for purposes of this Section 2.3, instead be deemed a reference to “S-3 Registration”). Whenever the Company is required by this Section 2.3 to use its best efforts to effect the registration of Registrable Securities, each of the procedures and requirements of Section 2.1(a) and 2.1(e) (including but not limited to the requirements that the Company (A) notify all Holders of Registrable Securities from whom such Request for registration has not been received and provide them with the opportunity to participate in the offering and (B) use its best efforts to have such S-3 Registration Statement declared and remain effective for the time period specified herein) shall apply to such registration (and any reference in such Sections 2.1(a) and 2.1(e) to “Demand Registration” shall, for purposes of this Section 2.3, instead be deemed a reference to “S-3 Registration”). Notwithstanding anything to the contrary contained herein, no Request may be made under this Section 2.3 within 90 days after the effective date of a Registration Statement filed by the Company covering a firm commitment Underwritten Offering in which the Holders of Registrable Securities shall have been entitled to join pursuant to this Agreement in which there shall have been effectively registered all shares of Registrable Securities as to which registration shall have been requested. There is no limitation on the number of S-3 Registrations that the Company is obligated to effect.

The registration rights granted pursuant to the provisions of this Section 2.3(a) shall be in addition to the registration rights granted pursuant to the other provisions of this Section 2.

(b) Shelf Registration. If a request made pursuant to Section 2.1 or 2.3(a) is for a Shelf Registration, the Company shall use its best efforts to keep the Shelf Registration continuously effective through the date on which all of the Registrable Securities covered by such Shelf Registration may be sold pursuant to Rule 144(k) under the Securities Act (or any successor provision having similar effect); provided, however, that prior to the termination of

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such Shelf Registration, the Company shall first furnish to each Holder of Registrable Securities participating in such Shelf Registration (i) an opinion, in form and substance satisfactory to the Majority Holders of the Registration, of counsel for the Company satisfactory to the Majority Holders of the Registration stating that such Registrable Securities are freely saleable pursuant to Rule 144(k) under the Securities Act (or any successor provision having similar effect) or (ii) a “No-Action Letter” from the staff of the SEC stating that the SEC would not recommend enforcement action if the Registrable Securities included in such Shelf Registration were sold in a public sale other than pursuant to an effective registration statement.

2.4 Expenses. The Company shall pay all Registration Expenses in connection with any Demand Registration, Incidental Registration, S-3 Registration or Shelf Registration, whether or not such registration shall become effective and whether or not all Registrable Securities originally requested to be included in such registration are withdrawn or otherwise ultimately not included in such registration, except as otherwise provided with respect to a Withdrawn Request and a Withdrawn Demand Registration in Section 2.1(a). Each Holder shall pay all discounts and commissions payable to underwriters, selling brokers, managers or other similar Persons engaged in the distribution of such Holder’s Registrable Securities pursuant to any registration pursuant to this Section 2.

2.5 Underwritten Offerings.

(a) Demand Underwritten Offerings. If requested by the sole or lead managing Underwriter for any Underwritten Offering effected pursuant to a Demand Registration or an S-3 Registration, the Company shall enter into a customary underwriting agreement with the Underwriters for such offering, such agreement to be reasonably satisfactory in substance and form to each Holder of Registrable Securities participating in such offering and to contain such representations and warranties by the Company and such other terms as are generally prevailing in agreements of that type, including, without limitation, indemnification and contribution to the effect and to the extent provided in Section 5.

(b) Holders of Registrable Securities to be Parties to Underwriting Agreement. The Holders of Registrable Securities to be distributed by Underwriters in an Underwritten Offering contemplated by Section 2 shall be parties to the underwriting agreement between the Company and such Underwriters and may, at such Holders’ option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such Underwriters shall also be made to and for the benefit of such Holders of Registrable Securities and that any or all of the conditions precedent to the obligations of such Underwriters under such underwriting agreement be conditions precedent to the obligations of such Holders of Registrable Securities; provided, however, that the Company shall not be required to make any representations or warranties with respect to written information specifically provided by a selling Holder for inclusion in the Registration Statement. No Holder shall be required to make any representations or warranties to, or agreements with, the Company or the Underwriters other than representations, warranties or agreements regarding such Holder, such Holder’s Registrable Securities and such Holder’s intended method of disposition.

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(c) Participation in Underwritten Registration. Notwithstanding anything herein to the contrary, no Person may participate in any underwritten registration hereunder unless such Person (i) agrees to sell its securities on the same terms and conditions provided in any underwritten arrangements approved by the Persons entitled hereunder to approve such arrangement and (ii) accurately completes and executes in a timely manner all questionnaires, powers of attorney, indemnities, custody agreements, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

2.6 Postponements. The Company shall be entitled to postpone a Demand Registration and an S-3 Registration and to require the Holders of Registrable Securities to discontinue the disposition of their securities covered by a Shelf Registration during any Blackout Period (as defined below) (i) if the Board of Directors of the Company determines in good faith that effecting such a registration or continuing such disposition at such time would have a material adverse effect upon a proposed sale of all (or substantially all) of the assets of the Company or a merger, reorganization, recapitalization or similar current transaction materially affecting the capital structure or equity ownership of the Company, or (ii) if the Company is in possession of material information which the Board of Directors of the Company determines in good faith it is not in the best interests of the Company to disclose in a registration statement at such time; provided, however, that the Company may only delay a Demand Registration or an S-3 Registration pursuant to this Section 2.6 by delivery of a Blackout Notice (as defined below) within 30 days of delivery of the request for such Registration under Section 2.1 or Section 2.3, as applicable, and may delay a Demand Registration or an S-3 Registration and require the Holders of Registrable Securities to discontinue the disposition of their securities covered by a Shelf Registration only for a reasonable period of time not to exceed 90 days (or such earlier time as such transaction is consummated or no longer proposed or the material information has been made public) (the “Blackout Period”). There shall not be more than one Blackout Period in any 12 month period. The Company shall promptly notify the Holders in writing (a “Blackout Notice”) of any decision to postpone a Demand Registration or an S-3 Registration or to discontinue sales of Registrable Securities covered by a Shelf Registration pursuant to this Section 2.6 and shall include a general statement of the reason for such postponement, an approximation of the anticipated delay and an undertaking by the Company promptly to notify the Holders as soon as a Demand Registration or an S-3 Registration may be effected or sales of Registrable Securities covered by a Shelf Registration may resume. In making any such determination to initiate or terminate a Blackout Period, the Company shall not be required to consult with or obtain the consent of any Holder, and any such determination shall be the Company’s sole responsibility. Each Holder shall treat all notices received from the Company pursuant to this Section 2.6 in the strictest confidence and shall not disseminate such information. If the Company shall postpone the filing of a Demand Registration Statement or an S-3 Registration Statement, the Initiating Holders for which registration was requested in the Request who were to participate therein shall have the right to withdraw the request for registration. Any such withdrawal shall be made by giving written notice to the Company within 30 days after receipt of the Blackout Notice. Such withdrawn registration request shall not be treated as a Demand Registration effected pursuant to Section 2.1 (and shall not be counted towards the number of Demand Registrations effected), and the Company shall pay all Registration Expenses in connection therewith.

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3. HOLDBACK ARRANGEMENTS.

3.1 Restrictions on Sale by Holders of Registrable Securities. Each Holder of Registrable Securities agrees, by acquisition of such Registrable Securities, if timely requested in writing by the sole or lead managing Underwriter in an Underwritten Offering of any Registrable Securities, not to make any short sale of, loan, grant any option for the purchase of or effect any public sale or distribution, including a sale pursuant to Rule 144 (or any successor provision having similar effect) under the Securities Act of any Registrable Securities or any other equity security of the Company (or any security convertible into or exchangeable or exercisable for any equity security of the Company) (except as part of such underwritten registration), during the time period reasonably requested by the sole or lead managing Underwriter not to exceed 90 days, beginning on the effective date of the applicable Registration Statement.

3.2 Restrictions on Sale by the Company and Others. The Company agrees that (i) if timely requested in writing by the sole or lead managing Underwriter in an Underwritten Offering of any Registrable Securities, not to make any short sale of, loan, grant any option for the purchase of or effect any public sale or distribution of any of the Company’s equity securities (or any security convertible into or exchangeable or exercisable for any of the Company’s equity securities) during the time period reasonably requested by the sole or lead managing Underwriter not to exceed 90 days, beginning on the effective date of the applicable Registration Statement (except as part of such underwritten registration or pursuant to registrations on Forms S-4 or S-8 or any successor form to such forms), and (ii) it will cause each holder of equity securities (or any security convertible into or exchangeable or exercisable for any of its equity securities) of the Company purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to so agree.

4. REGISTRATION PROCEDURES.

4.1 Obligations of the Company. Whenever the Company is required to effect the registration of Registrable Securities under the Securities Act pursuant to Section 2 of this Agreement, the Company shall, as expeditiously as possible:

(a) prepare and file with the SEC (promptly, and in any event within 60 days after receipt of a request to register Registrable Securities) the requisite Registration Statement to effect such registration, which Registration Statement shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and the Company shall use its best efforts to cause such Registration Statement to become effective (provided, that the Company may discontinue any registration of its securities that are not Registrable Securities, and, under the circumstances specified in Section 2.2, its securities that are Registrable Securities); provided, however, that before filing a Registration Statement or Prospectus or any amendments or supplements thereto, or comparable statements under securities or blue sky laws of any jurisdiction, the Company shall (i) provide Holders’ Counsel and any other Inspector with an adequate and appropriate opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein (and each amendment or supplement thereto or comparable statement) to be filed with the SEC, which documents shall be subject to the review and comment of Holders’ Counsel, and (ii) not file any such Registration Statement or Prospectus (or amendment or

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supplement thereto or comparable statement) with the SEC to which Holder’s Counsel, any selling Holder or any other Inspector shall have reasonably objected on the grounds that such filing does not comply in all material respects with the requirements of the Securities Act or of the rules or regulations thereunder;

(b) prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary (i) to keep such Registration Statement effective, and (ii) to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement, in each case until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller(s) thereof set forth in such Registration Statement; provided, that except with respect to any Shelf Registration, such period need not extend beyond nine months after the effective date of the Registration Statement; and provided further, that with respect to any Shelf Registration, such period need not extend beyond the time period provided in Section 2.3, and which periods, in any event, shall terminate when all Registrable Securities covered by such Registration Statement have been sold (but not before the expiration of the 90 day period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable);

(c) furnish, without charge, to each selling Holder of such Registrable Securities and each Underwriter, if any, of the securities covered by such Registration Statement, such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits), and the Prospectus included in such Registration Statement (including each preliminary Prospectus) in conformity with the requirements of the Securities Act, and other documents, as such selling Holder and Underwriter may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such selling Holder (the Company hereby consenting to the use in accordance with applicable law of each such Registration Statement (or amendment or post-effective amendment thereto) and each such Prospectus (or preliminary prospectus or supplement thereto) by each such selling Holder of Registrable Securities and the Underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Registration Statement or Prospectus);

(d) prior to any public offering of Registrable Securities, use its best efforts to register or qualify all Registrable Securities and other securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as any selling Holder of Registrable Securities covered by such Registration Statement or the sole or lead managing Underwriter, if any, may reasonably request to enable such selling Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such selling Holder and to continue such registration or qualification in effect in each such jurisdiction for as long as such Registration Statement remains in effect (including through new filings or amendments or renewals), and do any and all other acts and things which may be necessary or advisable to enable any such selling Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such selling Holder; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 4.1(d), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction;

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(e) use its best efforts to obtain all other approvals, consents, exemptions or authorizations from such governmental agencies or authorities as may be necessary to enable the selling Holders of such Registrable Securities to consummate the disposition of such Registrable Securities;

(f) promptly notify Holders’ Counsel, each Holder of Registrable Securities covered by such Registration Statement and the sole or lead managing Underwriter, if any: (i) when the Registration Statement, any pre-effective amendment, the Prospectus or any prospectus supplement related thereto or post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any state securities or blue sky authority for amendments or supplements to the Registration Statement or the Prospectus related thereto or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation or threat of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose, (v) of the existence of any fact of which the Company becomes aware or the happening of any event which results in (A) the Registration Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein not misleading, or (B) the Prospectus included in such Registration Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein, in the light of the circumstances under which they were made, not misleading, (vi) if at any time the representations and warranties contemplated by Section 2.5(b) cease to be true and correct in all material respects, and (vii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate or that there exists circumstances not yet disclosed to the public which make further sales under such Registration Statement inadvisable pending such disclosure and post-effective amendment; and, if the notification relates to an event described in any of the clauses (ii) through (vii) of this Section 4.1(f), the Company shall promptly prepare a supplement or post-effective amendment to such Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that (1) such Registration Statement shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (2) as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading (and shall furnish to each such Holder and each Underwriter, if any, a reasonable number of copies of such Prospectus so supplemented or amended); and if the notification relates to an event described in clause (iii) of this Section 4.1(f), the Company shall take all reasonable action required to prevent the entry of such stop order or to remove it if entered;

(g) make available for inspection by any selling Holder of Registrable Securities, any sole or lead managing Underwriter participating in any disposition pursuant to such Registration Statement, Holders’ Counsel and any attorney, accountant or other agent

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retained by any such seller or any Underwriter (each, an “Inspector” and, collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company and any subsidiaries thereof as may be in existence at such time (collectively, the “Records”) as shall be necessary, in the opinion of such Holders’ and such Underwriters’ respective counsel, to enable them to exercise their due diligence responsibility and to conduct a reasonable investigation within the meaning of the Securities Act, and cause the Company’s and any subsidiaries’ officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspectors in connection with such Registration Statement;

(h) obtain an opinion from the Company’s counsel and a “cold comfort” letter from the Company’s independent public accountants who have certified the Company’s financial statements included or incorporated by reference in such Registration Statement, in each case dated the effective date of such Registration Statement (and if such registration involves an Underwritten Offering, dated the date of the closing under the underwriting agreement), in customary form and covering such matters as are customarily covered by such opinions and “cold comfort” letters delivered to underwriters in underwritten public offerings, which opinion and letter shall be reasonably satisfactory to the sole or lead managing Underwriter, if any, and to the Majority Holders of the Registration, and furnish to each Holder participating in the offering and to each Underwriter, if any, a copy of such opinion and letter addressed to such Holder (in the case of the opinion) and Underwriter (in the case of the opinion and the “cold comfort” letter);

(i) provide a CUSIP number for all Registrable Securities and provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities covered by such Registration Statement not later than the effectiveness of such Registration Statement;

(j) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC and any other governmental agency or authority having jurisdiction over the offering, and make available to its security holders, as soon as reasonably practicable but no later than 90 days after the end of any 12-month period, an earnings statement (i) commencing at the end of any month in which Registrable Securities are sold to Underwriters in an Underwritten Offering and (ii) commencing with the first day of the Company’s calendar month next succeeding each sale of Registrable Securities after the effective date of a Registration Statement, which statement shall cover such 12-month periods, in a manner which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

(k) if so requested by the Initiating Holders, use its best efforts to cause all such Registrable Securities to be listed (i) on each national securities exchange on which the Company’s securities are then listed or (ii) if securities of the Company are not at the time listed on any national securities exchange (or if the listing of Registrable Securities is not permitted under the rules of each national securities exchange on which the Company’s securities are then listed), on a national securities exchange designated by the Majority Holders of the Registration;

(l) keep each selling Holder of Registrable Securities advised in writing as to the initiation and progress of any registration under Section 2 hereunder;

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(m) enter into and perform customary agreements (including, if applicable, an underwriting agreement in customary form) and provide officers’ certificates and other customary closing documents;

(n) cooperate with each selling Holder of Registrable Securities and each Underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD and make reasonably available its employees and personnel and otherwise provide reasonable assistance to the Underwriters (taking into account the needs of the Company’s businesses and the requirements of the marketing process) in the marketing of Registrable Securities in any Underwritten Offering;

(o) furnish to each Holder participating in the offering and the sole or lead managing Underwriter, if any, without charge, at least one manually-signed copy of the Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those deemed to be incorporated by reference);

(p) cooperate with the selling Holders of Registrable Securities and the sole or lead managing Underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the underwriting agreement prior to any sale of Registrable Securities to the Underwriters or, if not an Underwritten Offering, in accordance with the instructions of the selling Holders of Registrable Securities at least three business days prior to any sale of Registrable Securities;

(q) if requested by the sole or lead managing Underwriter or any selling Holder of Registrable Securities, immediately incorporate in a prospectus supplement or post-effective amendment such information concerning such Holder of Registrable Securities, the Underwriters or the intended method of distribution as the sole or lead managing Underwriter or the selling Holder of Registrable Securities reasonably requests to be included therein and as is appropriate in the reasonable judgment of the Company, including, without limitation, information with respect to the number of shares of the Registrable Securities being sold to the Underwriters, the purchase price being paid therefor by such Underwriters and with respect to any other terms of the Underwritten Offering of the Registrable Securities to be sold in such offering; make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; and supplement or make amendments to any Registration Statement if requested by the sole or lead managing Underwriter of such Registrable Securities; and

(r) use its best efforts to take all other steps necessary to expedite or facilitate the registration and disposition of the Registrable Securities contemplated hereby.

4.2 Seller Information. The Company may require each selling Holder of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding such Holder, such Holder’s Registrable Securities and such Holder’s

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intended method of disposition as the Company may from time to time reasonably request in writing; provided that such information shall be used only in connection with such registration.

If any Registration Statement or comparable statement under “blue sky” laws refers to any Holder by name or otherwise as the Holder of any securities of the Company, then such Holder shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to such Holder and the Company, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company, and (ii) in the event that such reference to such Holder by name or otherwise is not in the judgment of the Company, as advised by counsel, required by the Securities Act or any similar federal statute or any state “blue sky” or securities law then in force, the deletion of the reference to such Holder.

4.3 Notice to Discontinue. Each Holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4.1(f)(ii) through (vii), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4.1(f) and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Holder’s possession of the Prospectus covering such Registrable Securities which is current at the time of receipt of such notice. If the Company shall give any such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement (including, without limitation, the period referred to in Section 4.1(b)) by the number of days during the period from and including the date of the giving of such notice pursuant to Section 4.1(f) to and including the date when the Holder shall have received the copies of the supplemented or amended prospectus contemplated by and meeting the requirements of Section 4.1(f).

5. INDEMNIFICATION; CONTRIBUTION.

5.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each Holder of Registrable Securities, its officers, directors, partners, members, shareholders, employees, Affiliates and agents (collectively, “Agents”) and each Person who controls such Holder (within the meaning of the Securities Act) and its Agents with respect to each registration which has been effected pursuant to this Agreement, against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) in respect thereof, and expenses (as incurred or suffered and including, but not limited to, any and all expenses incurred in investigating, preparing or defending any litigation or proceeding, whether commenced or threatened, and the reasonable fees, disbursements and other charges of legal counsel) in respect thereof (collectively, “Claims”), insofar as such Claims arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (including any preliminary, final or summary prospectus and any amendment or supplement thereto) related to any such registration or any omission or alleged omission to state

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a material fact required to be stated therein or necessary to make the statements therein not misleading, , or any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, or any qualification or compliance incident thereto; provided, however, that the Company will not be liable in any such case to the extent that any such Claims arise out of or are based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact so made in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by such Holder specifically stating that it was expressly for use therein. The Company shall also indemnify any Underwriters of the Registrable Securities, their Agents and each Person who controls any such Underwriter (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Person who may be entitled to indemnification pursuant to this Section 5 and shall survive the transfer of securities by such Holder or Underwriter.

5.2 Indemnification by Holders. Each Holder, if Registrable Securities held by it are included in the securities as to which a registration is being effected, agrees to, severally and not jointly, indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, each other Person who participates as an Underwriter in the offering or sale of such securities and its Agents and each Person who controls the Company or any such Underwriter (within the meaning of the Securities Act) and its Agents against any and all Claims, insofar as such Claims arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (including any preliminary, final or summary prospectus and any amendment or supplement thereto) related to such registration, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by such Holder specifically stating that it was expressly for use therein; provided, however, that the aggregate amount which any such Holder shall be required to pay pursuant to this Section 5.2 shall in no event be greater than the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities pursuant to the Registration Statement giving rise to such Claims less all amounts previously paid by such Holder with respect to any such Claims. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such securities by such Holder or Underwriter.

5.3 Conduct of Indemnification Proceedings. Promptly after receipt by an indemnified party of notice of any Claim or the commencement of any action or proceeding involving a Claim under this Section 5, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Section 5, (i) notify the indemnifying party in writing of the Claim or the commencement of such action or proceeding; provided, that the failure of any indemnified party to provide such notice shall not relieve the indemnifying party of its obligations under this Section 5, except to the extent the indemnifying party is materially and actually prejudiced thereby and shall not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under this Section 5, and (ii)

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permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any indemnified party shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (A) the indemnifying party has agreed in writing to pay such fees and expenses, (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such indemnified party within 10 days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so, (C) in the reasonable judgment of any such indemnified party, based upon advice of counsel, a conflict of interest may exist between such indemnified party and the indemnifying party with respect to such claims (in which case, if the indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such indemnified party) or (D) such indemnified party is a defendant in an action or proceeding which is also brought against the indemnifying party and reasonably shall have concluded that there may be one or more legal defenses available to such indemnified party which are not available to the indemnifying party. No indemnifying party shall be liable for any settlement of any such claim or action effected without its written consent, which consent shall not be unreasonably withheld. In addition, without the consent of the indemnified party (which consent shall not be unreasonably withheld), no indemnifying party shall be permitted to consent to entry of any judgment with respect to, or to effect the settlement or compromise of any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim), unless such settlement, compromise or judgment (1) includes an unconditional release of the indemnified party from all liability arising out of such action or claim, (2) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party, and (3) does not provide for any action on the part of any party other than the payment of money damages which is to be paid in full by the indemnifying party.

5.4 Contribution. If the indemnification provided for in Section 5.1 or 5.2 from the indemnifying party for any reason is unavailable to (other than by reason of exceptions provided therein), or is insufficient to hold harmless, an indemnified party hereunder in respect of any Claim, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Claim in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, in connection with the actions which resulted in such Claim, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. If, however, the foregoing allocation is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations.

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The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.4 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by a party as a result of any Claim referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth in Section 5.3, any legal or other fees, costs or expenses reasonably incurred by such party in connection with any investigation or proceeding. Notwithstanding anything in this Section 5.4 to the contrary, no indemnifying party (other than the Company) shall be required pursuant to this Section 5.4 to contribute any amount in excess of the net proceeds received by such indemnifying party from the sale of the Registrable Securities pursuant to the Registration Statement giving rise to such Claims, less all amounts previously paid by such indemnifying party with respect to such Claims. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

5.5 Other Indemnification. Indemnification similar to that specified in the preceding Sections 5.1 and 5.2 (with appropriate modifications) shall be given by the Company and each selling Holder of Registrable Securities with respect to any required registration or other qualification of securities under any Federal or state law or regulation of any governmental authority, other than the Securities Act. The indemnity agreements contained herein shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract.

5.6 Indemnification Payments. The indemnification and contribution required by this Section 5 shall be made by periodic payments of the amount thereof during the course of any investigation or defense, as and when bills are received or any expense, loss, damage or liability is incurred.

6. General.

6.1 Adjustments Affecting Registrable Securities. The Company agrees that it shall not effect or permit to occur any combination or subdivision of shares which would adversely affect the ability of the Holder of any Registrable Securities to include such Registrable Securities in any registration contemplated by this Agreement or the marketability of such Registrable Securities in any such registration.

6.2 Registration Rights to Others. If the Company shall at any time hereafter provide to any holder of any securities of the Company rights with respect to the registration of such securities under the Securities Act, (i) such rights shall not be in conflict with or adversely affect any of the rights provided in this Agreement to the Holders and (ii) if such rights are provided on terms or conditions more favorable to such holder than the terms and conditions provided in this Agreement, the Company shall provide (by way of amendment to this Agreement or otherwise) such more favorable terms or conditions to the Holders.

6.3 Availability of Information; Rule 144; Rule 144A; Other Exemptions. So long as the Company shall not have filed a registration statement pursuant to Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act, the Company

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shall, at any time and from time to time, upon the request of any Holder of Registrable Securities and upon the request of any Person designated by such Holder as a prospective purchaser of any Registrable Securities, furnish in writing to such Holder or such prospective purchaser, as the case may be, a statement as of a date not earlier than 12 months prior to the date of such request of the nature of the business of the Company and the products and services it offers and copies of the Company’s most recent balance sheet and profit and loss and retained earnings statements, together with similar financial statements for such part of the two preceding fiscal years as the Company shall have been in operation, all such financial statements to be audited to the extent audited statements are reasonable available, provided that, in any event the most recent financial statements so furnished shall include a balance sheet as of a date less than 16 months prior to the date of such request, statements of profit and loss and retained earnings for the 12 months preceding the date of such balance sheet, and, if such balance sheet is not as of a date less than 6 months prior to the date of such request, additional statements of profit and loss and retained earnings for the period from the date of such balance sheet to a date less than 6 months prior to the date of such request. If the Company shall have filed a registration statement pursuant to the requirements of Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act, the Company covenants that it shall timely file any reports required to be filed by it under the Securities Act or the Exchange Act (including, but not limited to, the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of Rule 144 under the Securities Act), and that it shall take such further action as any Holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 and Rule 144A under the Securities Act, as such rules may be amended from time to time, or (ii) any other rule or regulation now existing or hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements.

6.4 Amendments and Waivers. The provisions of this Agreement may not be amended, modified, supplemented or terminated, and waivers or consents to departures from the provisions hereof may not be given, without the written consent of the Company and each of the Principal Stockholder and the Minority Stockholder; provided, however, that no such amendment, modification, supplement, waiver or consent to departure shall reduce the aforesaid percentage of Registrable Securities without the written consent of all of the Holders of Registrable Securities; and provided further, that nothing herein shall prohibit any amendment, modification, supplement, termination, waiver or consent to departure the effect of which is limited only to those Holders who have agreed to such amendment, modification, supplement, termination, waiver or consent to departure.

6.5 Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, telecopier, any courier guaranteeing overnight delivery or first class registered or certified mail, return receipt requested, postage prepaid, addressed to the applicable party at the address set forth below or such other address as may hereafter be designated in writing by such party to the other parties in accordance with the provisions of this Section:

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				If to the Company, to:
				c/o LJH, LTD.
				377 Neva Lane
				Denison, TX 75020
				Attn: Lacy Harber
				Telecopy: (903) 465-6514
				Telephone: (903) 465-6937

		(i)		With a copy to:

				Bracewell & Giuliani LLP
				500 N. Akard Street, Suite 4000
				Dallas, TX 75201
				Attention: Michael W. Tankersley
				Telecopy: (214) 758-1010
				Telephone: (214) 758-1000

				If to the Principal Stockholder, to:

				377 Neva Lane
				Denison, TX 75020
				Attn: Lacy Harber
				Telecopy: (903) 465-6514
				Telephone: (903) 465-6937

		(ii)		With a copy to:
				Bracewell & Giuliani LLP
				500 N. Akard Street, Suite 4000
				Dallas, TX 75201
				Attention: Michael W. Tankersley
				Telecopy: (214) 758-1010
				Telephone: (214) 758-1000

		(iii)		If to the Minority Stockholder, to:

				640 Fifth Avenue, 20th Floor
				New York, NY 10019
				Attn: Daniel Sapadin CFO
				Telecopy: (212) 753-2760
				Telephone: (212) 688-2550

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				With a copy to:

				Schulte Roth & Zabel LLP
				900 Third Avenue
				New York, New York 10022
				Attn: Peter J. Halasz
				Telecopy: (212) 593-5955
				Telephone: (212) 756-2000

		(iv)		If to any subsequent Holder, to the address of such Person set forth in the records of the Company.

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when receipt is acknowledged, if telecopied; on the next business day, if timely delivered to a courier guaranteeing overnight delivery; and five days after being deposited in the mail, if sent first class or certified mail, return receipt requested, postage prepaid.

6.6 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors and permitted assigns (including any permitted transferee of Registrable Securities). Any Holder may assign to any permitted (as determined under the Stockholders’ Agreement, among the parties hereto, dated the date hereof (the “Stockholders’ Agreement”)) transferee of its Registrable Securities (other than a transferee that acquires such Registrable Securities in a registered public offering or pursuant to a sale under Rule 144 of the Securities Act (or any successor rule)), its rights and obligations under this Agreement; provided, however, if any permitted transferee shall take and hold Registrable Securities, such transferee shall promptly notify the Company and by taking and holding such Registrable Securities such permitted transferee shall automatically be entitled to receive the benefits of and be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement as if it were a party hereto (and shall, for all purposes, be deemed a Holder under this Agreement). If the Company shall so request, any heir, successor or permitted assign (including any permitted transferee) shall agree in writing to acquire and hold the Registrable Securities subject to all of the terms hereof. For purposes of this Agreement, “successor” for any entity other than a natural person shall mean a successor to such entity as a result of such entity’s merger, consolidation, sale of substantially all of its assets, or similar transaction. Except as provided above or otherwise permitted by this Agreement, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any Holder or by the Company without the consent of the other parties hereto.

6.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which, when so executed and delivered, shall be deemed to be an original, but all of which counterparts, taken together, shall constitute one and the same instrument.

6.8 Descriptive Headings, Etc. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein.

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Unless the context of this Agreement otherwise requires: (1) words of any gender shall be deemed to include each other gender; (2) words using the singular or plural number shall also include the plural or singular number, respectively; (3) the words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and paragraph references are to the Sections and paragraphs of this Agreement unless otherwise specified; (4) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (5) “or” is not exclusive; and (6) provisions apply to successive events and transactions.

6.9 Severability. In the event that any one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other respect and of the other remaining provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law.

6.10 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

6.11 Remedies; Specific Performance. The parties hereto acknowledge that money damages would not be an adequate remedy at law if any party fails to perform in any material respect any of its obligations hereunder, and accordingly agree that each party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to seek to compel specific performance of the obligations of any other party under this Agreement, without the posting of any bond, in accordance with the terms and conditions of this Agreement in any court of the United States or any State thereof having jurisdiction, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law. Except as otherwise provided by law, a delay or omission by a party hereto in exercising any right or remedy accruing upon any such breach shall not impair the right or remedy or constitute a waiver of or acquiescence in any such breach. No remedy shall be exclusive of any other remedy. All available remedies shall be cumulative.

6.12 Entire Agreement. This Agreement, the Stockholders’ Agreement and the Transaction Agreement (collectively, the “Other Agreements”) are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings relating to such subject matter, other than those set forth or referred to herein or in the Other Agreements. This Agreement and the Other Agreements supersede all prior agreements and understandings between the Company and the other parties to this Agreement with respect to such subject matter.

6.13 Nominees for Beneficial Owners. In the event that any Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its

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election in writing delivered to the Company, be treated as the holder of such Registrable Securities for purposes of any request or other action by any holder or holders of Registrable Securities pursuant to this Agreement or any determination of any number or percentage of shares of Registrable Securities held by any holder or holders of Registrable Securities contemplated by this Agreement. If the beneficial owner of any Registrable Securities so elects, the Company may require assurances reasonably satisfactory to it of such owner’s beneficial ownership of such Registrable Securities.

6.14 Consent to Jurisdiction. Each party to this Agreement hereby irrevocably and unconditionally agrees that any legal action, suit or proceeding arising out of or relating to this Agreement or any agreements or transactions contemplated hereby may be brought in any federal court of the Southern District of New York or any state court located in New York County, State of New York, and hereby irrevocably and unconditionally expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and hereby irrevocably and unconditionally waives any claim (by way of motion, as a defense or otherwise) of improper venue, that it is not subject personally to the jurisdiction of such court, that such courts are an inconvenient forum or that this Agreement or the subject matter may not be enforced in or by such court. Each party hereby irrevocably and unconditionally consents to the service of process of any of the aforementioned courts in any such action, suit or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the address set forth or provided for in Section 6.5 of this Agreement, such service to become effective 10 days after such mailing. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law or commence legal proceedings or otherwise proceed against any other party in any other jurisdiction to enforce judgments obtained in any action, suit or proceeding brought pursuant to this Section.

6.15 Further Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

6.16 No Inconsistent Agreements. The Company will not hereafter enter into any agreement which is inconsistent with the rights granted to the Holders in this Agreement.

6.17 Construction. The Company and the Initial Holders acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement with its legal counsel and that this Agreement shall be construed as if jointly drafted by the Company and the Holders.

6.18 Costs and Attorney’s Fees. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement, the prevailing party shall recover from the non-prevailing party all of such prevailing party’s costs and reasonable attorneys’ fees incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.


		STOCKHOLDERS

		LJH, LTD.

		By:
		Name:		Lacy Harber
		Title:

		OWL CREEK I L.P.
				By: Owl creek Advisors, LLC its General Partner

		By:
		Name:		Jeffrey Altman
		Title:		Managing Member

		OWL CREEK II L.P.
				By: Owl creek Advisors, LLC its General Partner

		By:
		Name:		Jeffrey Altman
		Title:		Managing Member

		OWL CREEK OVERSEAS FUND LTD.

		By:
		Name:		Jeffrey Altman
		Title:		Director

		OWL CREEK OVERSEAS FUND II, LTD.

		By:
		Name:		Jeffrey Altman
		Title:		Director

		THE COMPANY

		TAS HOLDING, INC.

		By:
		Name:
		Title:

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